Retirement calculators are extremely useful in planning your financial future. However, these tools may provide misleading advice to families. Based on many available retirement calculators, one might make you believe you have thousands more in retirement income, while another may indicate that you are likely to run out of money.
Choosing Your Calculator
How do you know which retirement calculator to use? It depends on several factors, including your life stage and the complexity of your situation.
Retirement Calculator Rating Table
Ratings for these calculators are provided based on three key criteria: accuracy, ease of use, and education. Each calculator is assigned scores in each category, with accuracy accounting for 60% of the final score, while ease of use and education each represent 20%.
Calculator Accuracy
The accuracy of a retirement calculator refers to how reliable the displayed results are. The worst mistake a retiree can make is to plan for only the best-case scenario. Researching various online tools reveals that some provide only the best success scenario, exposing users to the risk of not achieving their retirement goals.
Ease of Use of Calculators
Ease of use depends on several elements, such as readability and visual appeal. Tools that use charts alongside numbers can be helpful, as seeing the transfer and flow of money visually is easier for most people to understand.
Education
The education element consists of explaining the methodology of the tool, helpful features, and general guidance. A calculator that explains everything well but does not allow for in-depth interpretation is often not appreciated, as it is usually hidden at the bottom of the page in the terms and conditions.
Tax Calculations in Retirement
Another issue with traditional retirement calculators is that they often do not give you an accurate picture of what your retirement income will look like after taxes. You are likely to pay taxes in retirement, and the amount of taxes you pay will depend on many factors that most retirement calculators do not take into account.
Although a retirement calculator is a good starting point, it may be better to meet with an experienced retirement planner to help you create a customized plan that fits your individual situation.
Source: https://www.thebalancemoney.com/web-s-best-retirement-income-calculators-2388842
Leave a Reply