Empower’s Retirement Planner – Making Forecasting Easy
The most common question we get from our mailing list subscribers is: Do I have enough saved for retirement? With Empower Retirement Planner, it's now possible to answer this question with some degree of confidence. Best of all — it's free!
Of course, I really have no idea of each reader's specific financial situation, and this is a complicated question that deserves a complicated answer. It's not something I can really help with a two-sentence solution. There are fee-only financial advisors that will charge at minimum a few hundred dollars to give you an answer.
Empower's Retirement Planner Features
With Empower's Retirement Planning service you get access to these features:
- Uses Your Savings and Spending Habits — It automatically pulls in your actual savings and spending habits from within Empower, not just estimated spending/savings habits. Most calculators ask users how much you save into retirement accounts and how much you spend each month.
- Tracks Progress Over Time — The app will track your retirement goals over time. Again because everything is linked up, this happens automatically.
- Accounts for Large Expenses — Quickly add in large financial expenditures along the way, other than just retirement. Most calculators assume your savings are all for retirement and ignore major purchases like college educations or home purchases. Empower's Retirement Planner allows you to input these events, when you think they’ll occur, and how much they’ll cost. The tool recalculates to see how those expenditures affect retirement goals.
- Large One-Time Savings Allotments — This feature allows for what people in the financial industry call “liquidity events.” Things like a sale of a business, exercising stock options, or getting an inheritance. The Retirement Planner lets users add these inflows to, so you can anticipate when they might occur.
- Monte Carlo Analysis — Runs multiple calculations and the possibility of a good outcome with your finances.
- Covers All of the Possible Variables — The service includes: taxes, inflation, withdrawals, saving increases, Social Security, and spousal retirement.
- iPad Access – You can do all of this via their iPad app.
- Recession Simulator – Find out how your portfolio would have fared in past recessions. You can select the age you would like to run the simulation and find out how much your balance would have been during a past market crash. You can also see the recovery time and the probability of meeting your retirement goals post-crash.
Why Choose Empower Over the Others?
At Investor Junkie, we think Empower is currently one of the best personal finance apps on the market, especially for individuals who want to track their investments as well as their other financial accounts. Check out our Empower review for details.
One of the things I personally like about their service is the ability to organize all of my accounts in one place, not only from my desktop computer but on the go with their mobile app. I like their service so much that I've made the permanent switch from Quicken's service to Empower.
The trend for automated financial services is to give assistance in retirement planning. Betterment was the first to offer this kind of feature. One problem is that Betterment only knows about Betterment accounts. It doesn't have a holistic view of your entire financial picture, and this is one of the biggest limitations of Betterment's service.
Granted the concept of retirement calculators has existed for years and is nothing new. The first decent calculator was available in Quicken over 20 years ago. I, in fact, was involved in creating the first online retirement calculator for T. Rowe Price's website way back in 1994.
Not all retirement calculators are created equally. What separates the good from the excellent retirement calculators are ones that use a Monte Carlo simulation to determine possible outcomes and the probability of those outcomes. Empower uses this with many variables you can adjust and auto-population of your financial accounts.
>>Further Reading: How to Invest for Retirement
Empower Retirement Planner Alternatives
There are a few other companies that also offer retirement planning if you're looking for an alternative.
- Betterment not just a robo advisor. They also have a useful retirement calculator. All you have to do is input your age, your household income (before taxes), how much you have saved for retirement already, and the amount your household is saving for retirement each year. The calculator will then give you an estimate of how much you'll be able to spend per year.
- CountAbout is a budgeting and personal finance software. CountAbout's FIRE widget that tracks your monthly expenses along with any potential passive income and plots them over time. You can also analyze your future finances by setting your retirement withdrawal rate and calculate your passive income potential from the size of your assets.
- Charles Schwab has a free calculator to help you reach your goals. Just input some details about your current situation and plans (as well as your risk tolerance), and the calculator will do the rest. You'll receive a summary of your retirement savings health, along with a series of suggested adjustments you can make to your portfolio.
Final Thoughts on Empower Retirement Planner
If you already use Empower, then there's not much you need to input to test out this tool. Just log in and access the Retirement Planner for free. Here's how you get started with Empower.
In my tests, I ran multiple “what if” scenarios using my personal finances. I saw the changes in the possibility in meeting our family goals. I was impressed with its functionality and ease of use. It’s one of the best retirement calculators out there — paid or free. Once you have your accounts linked, it’s very easy for you to see exactly how you are progressing toward your retirement.
Of course, Empower hopes that seeing their tool will get you to use their financial services and other products. Though there is no obligation in using their paid services.
Empower's new Retirement Planner makes an already great service even better. I've seen commercial retirement calculators with fewer features. Best of all, this feature is also available for free. This puts their service in a different league than the online service Mint.com.
What numbers are these calculators using question inflation-adjusted numbers or today’s dollar value numbers?
I use Personal Cap, but think their retirement calculator is a bit wonky…or overly negative. I am an aggressive saver and it still gives me ~60% chance of meeting modest retirement goals.
I wonder if they are deflate success so they can sign you up for their services. As I have not found another calculator that aligns with their prediction
I tried Mint and was not impressed. It may be that I was not using it right. I just want to be able to track monthly/yearly expenses by category for year end. I am retiring soon and I want to see what I am spending now for various items, utilities, food, etc. in order to know what I will need financially. Since this is the beginning of the year I want to just import info as of now, not past items – which I could not do with Mint. Also, the market moves day to day, would my investment accounts update daily? Please advise.
The only thing I don’t like about their retirement planner is that I don’t see anyway to adjust the rate of return. It would be helpful to use different scenarios.
$5,000 per year Social Security? Methinks you could have used a more realistic number in the retirement planner.
That was just a screenshot supplied by Personal Capital since I didn’t want to use my own personal info in the screen captures.