Tracking Down a Plain Retirement Calculator That is Actually Helpful

It appears that whenever you go to a bank or financial planning company's website, they're offering some kind of new and simple retirement calculator.

The problem is - they're not simple. Every week, they get more and more complex and yet, at the same time, harder to use and control.

And yet, despite their increasing sophistication, they're still producing inaccurate results and diverging responses. One site will give you one piece of advice while another will tell you something completely different.

One may account for higher inflation rates with health care (typically double the national standard) while another will not.

And if you don't understand the results - or get the right ones - it could put your retirement at risk.

Underestimating how much you need to save could leave you with a retirement shortfall, while overestimating can cut into your money now - meaning you have to sacrifice expenses like college tuition or extra payments on your mortgage.

Despite all the risks, you can get quite a lot out of simple retirement calculator programs. To learn the basics, read on.

Use Multiple Calculators

Don't just depend on a single online retirement calculator to base your entire retirement future on. Instead, try several and pay close attention to which ones ask questions that are more pertinent to your current financial situation.

Merge Your Results

You also have to look at how each of these calculators evaluates your results and then merge all that diverging advice. For example, Morningstar, a company that advises 401(k) plans, estimates that people need about 70% of their pretax and preretirement income. Meanwhile Fidelity's online tool suggests you need about 85% of that income. That's a major difference and can result in two vastly different recommendations for savings.

You Want Features, Just Not a Laundry List

Customization is great as it allows you to fine tune a retirement calculator to your own personal needs and financial situation, but it can also make the process more complicated. Try a calculator like the one offered by the Employee Benefits Research Institute (choosetosave.org).

It allows you to input extra income sources and potential expenses like travel or lifestyle choices that could affect your savings needs. At the same time, it's simple and easy to follow.

Consult With a Professional

Yes, a financial advisor will charge you fees and commissions, but if you're having doubts they can be your best bet. Most people wouldn't leave the fate of a mysterious illness in the hands of WebMD (as helpful as it is), so why would you leave the fate of your entire retirement in the hands of a simple retirement calculator?

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