How to Use a Financial Planning Calculator for Retirement
If you are not familiar with using a financial planning calculator for retirement, it can be an excellent tool to help you determine how much monthly income you will need after you stop working. It asks you to enter several pieces of data before providing you with this information. Some examples include your current income, age of planned retirement, current and projected rates of return on investments, and whether you plan to downsize your home. You should expect to enter data about your age, marital status, and some clarifying questions about your lifestyle.
Once you have input all information that the financial planning calculator requests, it uses an algorithm to return specific recommendations. These typically include how much you should be saving each month now and how much you will need for a comfortable retirement. While this can be incredibly useful, keep in mind that the figures are only ballpark projections. If you have a unique situation or don’t feel comfortable relying on a financial planning calculator for retirement, be sure to schedule an appointment with a financial advisor.
What to Consider When Choosing a Retirement Planning Calculator
All online financial planning calculators are not created equal. When searching for the best one for you, make sure that it does not require more than a few minutes of your time. The tool should also allow you to enter different retirement ages to help you plan for various future scenarios. You don’t want to select a retirement calculator that gives you too much of an optimistic outlook on return rates or how long you can work without knowing your possible physical or mental limitations. Finally, look for a retirement financial planning calculator that uses today’s dollar figures when calculating results.
While you might want to conduct your own research to determine the best tool for you, here are two for you to consider:
- American Association of Retired Persons (AARP): You can access the AARP retirement calculator at this link. This will take you to an immediate three-step screening process that asks you to enter the types of information described above. A benefit of using AARP’s calculator is that it isn’t linked to any specific financial institution so you don’t have to worry about a future sales pitch.
- Fidelity My Plan Snapshot: The retirement calculator tool from Fidelity brings you through six screens that ask you just one question each. You can have your financial projections in as little as 60 seconds.
As always, don’t hesitate to use the resources at Fortified Retirement or contact us with questions at 833-542-6300.