Best online retirement calculator 2021
Personal Capital first presented what is by far the best financial dashboard I have used. It’s a free online tool that tracks everything from your bank accounts to your investments. It comes with great charts and tables that show your asset allocation, investment costs, and cash flow. Now they have introduced an equally awesome retirement calculator.
Personal Capital’s Ultimate Retirement Calculator
I spent time using the calculator. Here’s what I like about it:
- Automating: Unlike many retirement calculators, there is very little information to enter. Once you’ve linked your investment accounts to Personal Capital’s financial dashboard, it has most of the data it needs to run its simulations.
- Monte-Carlo analysis: This does not just assume a defined return on investment. Instead, it takes the investments you have, calculates the average return and beta (return variability), then runs 5,000 hypothetical return scenarios. The result is a probability calculation on the likelihood that you will have enough money in retirement. Mine was 93%.
- Customization: You can customize the calculator in several ways. For example, although it assumes an inflation rate of 4%, you can change this assumption. You can also enter spending goals, such as the cost of a retired world tour.
- Social Security: The calculator takes into account social security contributions, and allows you to set payments to specific amounts if you wish.
- Beautiful graphics: Like the financial dashboard, the retirement calculator comes with beautiful charts that easily communicate a lot of data.
- Special offer from Personal Capital: Get a FREE Portfolio Review valued at $ 799. Try Personal Capital for free and find out how to qualify for a free portfolio review.
To give you an idea of ââthe graphs, here is a graph of my results:
Customizing the retirement planner for best results
There are several important ways to customize the planner to suit your specific situation. First, you can change the deemed tax rate on retirement withdrawals, the inflation rate, and your life expectancy. At the very least, it is important to modify these assumptions to understand how sensitive the results are to these three assumptions. Changing the inflation rate assumption from 4% to 3% made a huge difference in my projected retirement account balances and increased my chances of having enough money in retirement to 97%.
Second, you can customize the assumptions about Social Security. You can change when you and your spouse start receiving social security and the estimated amount of the benefit.
Finally, you can change the assumptions about how much you’ll save each year. You can configure your savings rate to automatically increase by a set percentage each year. And you can set spending goals in retirement.
To give Personal capital Try Retirement Planner for free, log into your Personal Capital financial dashboard. If you have never signed up for the dashboard, you can do so to free with this link.
How to use the personal capital retirement savings calculator
The Personal Capital Retirement Savings Calculator is a great tool to help you determine if you are on the right track for retirement. It’s simple and easy to use, you just need to plug in a few variables and the calculator will do the rest.
Let’s see how to use it to get the most accurate number. You will enter the following parameters:
- The year you were born. The calculator will take your age and your investment horizon into account to help you determine where you should be.
- Current investable assets. This is the amount you need to invest, including the money you have already invested. Think about 401 (k), IRA, cash, and any other assets you own that you can invest today if needed.
- Annual savings. Project how much you are saving on an annual basis. This can include 401 (k), IRA, and other retirement savings (as well as any money you put aside).
- Risk tolerance. Personal Capital allows you to choose from five different levels of risk tolerance. This is an essential part of the calculator because it determines what types of investments you should be holding. My general recommendation is that the younger you are, the higher your tolerance for risk should be (since you have a longer window of time to retire). The reverse is true for someone nearing retirement – your risk tolerance should be lower since you have to think about preserving capital.
- The retirement age. The age at which you plan to retire. Keep in mind that there are nuances to the FIRE method – such as having to worry about how to treat taxes before you technically reach retirement age. Either way, pick an age when you think you want to retire.
- Annual retirement expenses. This could vary widely depending on whether you have a mortgage, where you are retiring, how healthy you are, etc. The best thing to do right now is to estimate what you think you need to live comfortably in retirement.
- Age of onset of social security. Assuming Social Security is still funded when you retire, choose the age at which you plan to start taking it. The default is 67, but you can take it earlier if you’re willing to pay a penalty.
- Annual social security. This is the amount (in dollars) that you hope to earn from Social Security. You can estimate this value using this tool.
- Other retirement income. If you plan to earn additional income in retirement (such as business income or secondary income), indicate it here.
After that, Personal Capital will project the likelihood of reaching your retirement goals so that you know whether you need to step up the pace and invest more, or perhaps adopt a more aggressive investment strategy.
Another realistic and free online retirement calculator
The easiest way to calculate what you will need to retire is to use the rule of 25. The rule says you should take how much you spend in a year and multiply it by 25. This should give you a number. in dollars which, when using the 4% rule (withdrawal of 4% per annum), you can live comfortably while maintaining your principal investment balance.
The personal capital retirement calculator will take inflation into account to some extent. But you have to assume that this is only an estimate. We don’t know what inflation will look like in the future, just as we won’t know what the economy will look like, so it’s best to take this estimate with a grain of salt.
According to Personal Capital, the average 401 (k) balance for a 65-year-old is $ 422,960, while the median 401 (k) balance for a 65-year-old is $ 165,740.
How much you need in retirement depends entirely on your current spending and saving habits. That being said, a good range to shoot is between $ 600,000 and $ 2 million, depending on various factors.
Research by SmartAsset shows that, on average, a $ 1 million retirement balance should last just over 23 years for most people.
Related: Best retirement planning and tracking apps