Planning for Retirement Using Online Calculators

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Planning for Retirement Using Online Calculators

• Presented by
• Danielle Walker and Dr. Jean Lown

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Objectives

• Be able to
• Use the Ballpark Estimate to figure retirement
  investing amounts needed
• Explore other online calculators
• Explain why you should recalculate yearly
• Explain why different calculators produce
  different results

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Online Retirement Calculators

• Purpose
• Give an ESTIMATE of what you will need to invest
  for retirement
• Or see if your current investments will last your
  retirement
• Dont forget about Social Security!

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Ballpark Etimate

• Website
• http//www.choosetosave.org/ballpark/

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What is the Ballpark Etimate?

• An easy-to-use two-page worksheet
• Helps you quickly identify approximately how much
  you need to invest for a comfortable retirement.

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How to use the Ballpark Etimate

• Interactive (on-line)
• All of the calculations are done for you
• You just enter the numbers
• Need to be on-line
• Non-interactive
• print the sheets from the web site
• fill in data do the calculations on your own.

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Data Needed for the Ballpark Etimate

• Current income
• Age expected longevity
• Planning for a Secure Retirement module 1
• http//www.livingto100.com
• Planned retirement age
• Percent of income to replace in retirement
• Health care in retirement

• Amount of pension
• Contact HR office
• 401(k), IRA balances
• Estimated Social Security benefits
• From annual statement
• Other retirement income
• Work?
• Rental income?

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Social Security

• Annual S.S. statement (via mail)
• Full Retirement Age (FRA) no longer 65!
• persons born 1943-54 66 years
• 1955-1959 66 2, 4, 6, 8, or 10 months
• persons born 1960 later 67 years
• 62 is earliest age for SS retirement
• Benefits are permanently reduced for early
  retirement

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Decisions

• Percent of income to be replaced
• How much of your current annual income will you
  need in retirement?
• 70 or higher
• living on a lot less in retirement isnt what
  most people want
• Health long term care costs are the BIG unknown

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More Decisions

• How long are you likely to live?
• Based on family history and health how long do
  you expect to live?
• Web-based longevity calculators
• Planning for a Secure Retirement
  http//www.ces.purdue.edu/retirement/
• http//www.livingto100.com

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Tips for Couples

• Each spouse should fill out own worksheet
• Divide joint assets
• each resource can be used only once
• If one spouses SS benefit is less than 50 of
  other spouses increase the lower annual benefit
  to 50 of higher earning spouses
• If John 12,000 Mary 4,000
• Increase Marys benefit to 6,000 (50 of
  spouses)

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What of Income?

• When determining your goal, you need to think
  about the type of retirement lifestyle you would
  like.
• Do you want the cruise-of-the-month retirement or
  are you planning to spend your time in the
  garden?
• Plan on health care (LTC) costing far more than
  you can imagine!
• 200,000 for a couple aged 65

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Planning Janes Retirement

• http//www.choosetosave.org/ballpark/

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Ballpark Etimate

• Note the title a rough estimate
• Re-calculate each year
• Individuals less than 10 years to retirement need
  more than an estimate.
• need a comprehensive plan based on their
  individual situation

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FINRA

• Has specific instructions for each category
• Other Income category is a little confusing -
  supposed to include Social Security
• Makes some assumptions but overall pretty helpful

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Info needed for FINRA

• Current Savings Balance
• Annual Retirement Income
• Annual Yield
• Other Income
• Inflation Rate
• Current Age

• Current Tax Rate
• Retirement Age
• Retirement Tax Rate
• Withdraw Until Age
• Inflate Contributions
• Are Annual Contributions Tax Sheltered

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FINRA

• Website
• http//apps.finra.org/Investor_Information/Calcula
  tors/1/RetirementCalc.aspx

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CNNMoney.com

• Very detailed
• Can add other fields for even more accuracy
• Can calculate for you and your spouse at the same
  time
• Results very specific
• Results are shown in graph form and contain the
  probability you will reach your goals

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Info for CNNMoney.com

• Current Age
• Desired Retirement Age
• Life Expectancy
• Current Income
• Typical Annual Raise
• Desired Annual Income in Retirement

• Expected Benefits
• Age Benefits will begin
• Survivor Benefits
• Savings info for 401k, IRA, or other retirement
  accounts
• Your portfolio volatility

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CNNMoney.com

• Website
• http//cgi.money.cnn.com/tools/retirementplanner/r
  etirementplanner.jsp

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TRowe Price

• Very helpful
• Tells how much you will need to save every month
  to reach your goal
• Does not include Social Security
• Less info than other calculators

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Info for TRowe Price

• Current Salary
• Tax Rate
• Inflation Rate
• Number of years until retirement
• Number of years living in retirement
• of Salary you want in retirement

• Pretax rate of return in retirement
• Current investments in taxable accounts
• Pretax rate of return on taxable accounts
• Current assets in tax-deferred accounts
• Rate of return on tax-deferred accounts

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TROWE Price

• Website
• http//www.troweprice.com/common/indexHtml3/0,0,ht
  mlid902,00.html?scnT._Rowe_Price_Calculrfpgid8
  278

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WellsFargo.com

• This is for people who want to see if what they
  are doing is going to last their whole retirement
• Very good instructions
• Annoying Audio - can be turned off
• Gives suggestions

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Info for WellsFargo.com

• First name
• Age
• Retirement Age
• Current Annual household income
• Current Retirement Savings

• Retirement Savings each month
• Annual income desired in retirement
• Do you own a home?
• Social Security

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WellsFargo.com

• Website
• http//www.wellsfargo.retiresecureindex.com/

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More detailed on-line calculators

• Monte Carlo simulation estimates a range of
  likelihoods of outliving your resources
• http//www.moneychimp.com/articles/volatility/mont
  ecarlo.htm
• http//www.dinkeytown.net/
• Mutual fund companies
• http//www.troweprice.com
• http//www.vanguard.com
• Personal finance magazine websites
• http//www.kiplinger.com
• http//money.cnn.com/magazines/moneymag/

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What if you get conflicting results?

• Conflicting results are expected!
• Due to
• different assumptions (inflation, rate of return
• level of detail
• Is SS included or not
• Longer time to retirement- more uncertainty
• Complete multiple calculators

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Planning for a Secure Retirement

• On-line course to help you plan your retirement
• http//www.ces.purdue.edu/retirement/

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Questions?
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