Are you saving enough for retirement? Will you be able to retire at the age you want? When will the money run out if you retire now?
These are complicated questions with (usually) complicated answers. Our first piece of advice is to talk to a financial planner, since a good one will be able to properly take into account your personal circumstances.
That said, if you want a quick gut-check on your current timeline for retirement there are hundreds of calculators online. Many banks and investment firms offer them to clients, as do various advice websites.
Below are five of our favorites. All of them are independent from any particular financial institution and are free. Each works a bit differently, so we suggest trying a few to get multiple viewpoints.
1. Smart Money
This isn’t so much a “calculator” as a tool to help you visualize your projected retirement savings and spending. What makes it our top pick is the great design and interactive interface. Through a series of sliders and inputs you can clearly see how much money you’ll have when you retire and what the results will be of saving more or spending less.
The tool allows you to easily adjust your age, savings rate, and current assets with additional options to add a spouse or Social Security income. There’s also a simple tab for changing the amount you expect to spend each year in retirement.
One piece of advice: play around with the Advance Settings. Like all of the calculators mentioned in this article, the Smart Money tool makes certain assumptions about tax rates, inflation rates and investment returns. We strongly recommend changing these numbers to see how they affect your projections.
In particular, try lowering your expected rate of return and/or increasing the inflation rate — you’ll be surprised at how much it changes things. The new numbers may look harsh, but at least you’ll be mentally prepared if the economy takes a downturn.
The AARP retirement calculator is also an excellent resource. It’s not as visual as the Smart Money tool, but that may be good for those who prefer text. Instead of sliders, the AARP calculator has a step-by-step questionnaire that asks you about your marital status, salary, savings rate and lifestyle.
A great feature of this tool is the “Your Options” section at the end, where you can clearly see what will happen to your savings if you make different decisions.
3. CNN Money
The CNN Money calculator is very similar to the previously mentioned tools. It has an almost identical format to the AARP offering — with a simple step-by-step process, though not quite as pretty.
However, it does have one big advantage: it quizzes you on the makeup of your retirement portfolio. This is invaluable for anyone who has felt confused or frustrated when asked for an “expected rate of return”.
This is the simplest of the calculators listed. It just asks for your current savings, your expected annual contribution, and, yes, your expected rate of return. While not great for in-depth planning, it is good for visualizing the amazing power of compound interest (basically even saving a little early can have huge payoffs later).
This tool has a lot of the same fields as the AARP and CNN Money calculators, as well as a similar look. Unlike the others it puts everything onto one page rather than splitting them up.
As you’re using it, be aware that the MSN tool currently defaults to a 8% annual rate of return. While this isn’t an outrageous figure, it may not work for everyone (see this article if you want to understand why). As with the other tools, we recommend changing the assumptions a few times to get a sense of how lower or higher returns over the years could affect your savings.
Photo by RambergMediaImgaes via Flickr.