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Ezine ready page
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Posted on December 31, 2008 by Trevor Price | Posted under Personal Finance
Strategies to Choose the Ideal 401K and Retirement Calculator
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However, each of these tools use different calculation strategies and different assumptions, meaning they all give you varying advice. To answer the question of which calculator produces the best results, we decided to test three different online calculators (only free ones). As an example test subject we used a single, 45-year old male currently earning $50,000 per year with a small mortgage, $90,000 in a 401(K) and a savings rate of about 10% per year. Our subject had a minimal mortgage balance, a savings rate of about 10% and approximately $90,000 saved in a 401(K). He wanted to retire by the time he was 65, live on $50,000 (100% of his pre-retirement income) and he expected to live until the age of 100. Keep reading to find out what each 401(K) calculator recommended and how they measured up. The Ballpark Estimate Calculator (Online at: choosetosave.org/ballpark) The Ballpark Estimate Calculator has some bad news - our test subject will have to save close to 56% of his annual salary to meet his goal of retiring by the time he's 65 with a 100% post-retirement income of $50,000. Prospects are grim for our test subject, unless he opts for riskier investments. The site took about 10 minutes to input our information and produce the results. It was simple to use and lets you add additional or unconventional income sources. Unfortunately, the results can be confusing to read, and if you want to fiddle with your figures, you need to start over from scratch. The Nationwide's Retirability Calculator (Online at: nationwide.com/nw/nrri/index.htm?wtgo=retirability) Nationwide's Retirability calculator gives users what it calls an "R-Score," essentially scoring them on their retirement-readiness. A good score is anything above 100. Our poor test subject scored an 88. In terms of quality and ease of use, the site was fairly fast and provided clear results. It took about 8 minutes to complete the questionnaire and calculate the results. Afterwards, it provided clear and easy to read results. Another bonus factor? It lets you input major assets like home equity. Calculator: AARP (URL: aarp.org/money/financial_planning/sessionseven/retirement_planning_calculator.html) The AARP calculator had some grim results, telling us we needed to save over $1600 a month to reach our goal, which is significantly higher than the $416 a month our test subject is currently saving. In terms of quality and ease, the AARP calculator was fast enough. It took about 10 minutes to complete. Though it wasn't bursting with features or fancy animations, it definitely produced results that were simple to read and easy to understand. About The Author: For great information on senior retirement preparation - please visit seniorretiretips.com - a popular site providing insights to help prepare for the next steps in your life journey - including Roth IRA contribution limits - retirement new homes - and many more! |
Tags: 401(K) CALCULATOR, RETIREMENT CALCULATOR, RETIREMENT PLANNING, RETIREMENT PREPARATION, RETIREMENT TOOLS
