Here at Investor Junkie, we talk all the time about the best ways you can build and protect your retirement nest egg. But did you know there are useful — and free — tools that can help you know just what you'll need for your golden years? Here's what we consider the best retirement planning tools.
Since the 1990s, people have relied on online financial calculators to crunch their retirement numbers. While many excellent services cost money (such as the brilliant Maximize My Social Security, which is worth the price tag if you're near retirement and need to make every Social Security dollar count), there are many more that are totally free!
We've checked out all of these services in-depth (you'll find links below to our full reviews), and today we're highlighting our favorite free retirement planning tools that you can use today to figure out if you're on the right path to retirement.
1. Personal Capital's Retirement Plannerreviewed this service. The platform offers many other features, as well.
The Personal Capital Retirement Planner has these features:
- Analyzes Your Actual Savings and Spending — It automatically pulls in your actual (not just estimated) saving and spending habits from within Personal Capital. Most other calculators ask users to enter this manually, which is time-consuming and error-prone.
- Accounts for Large Expenses — Quickly add large financial expenditures other than just retirement. Most calculators assume your savings are solely for retirement and ignore major purchases like college educations or homes. Personal Capital'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 these expenditures affect your retirement goals.
- Large One-Time Savings Allotments — This feature allows for what people in the financial industry call “liquidity events.” Things like selling a business, exercising stock options, or getting an inheritance. The Retirement Planner lets users add these inflows, so you can anticipate when they might occur.
- Covers All of the Possible Variables — The service includes taxes, inflation, withdrawals, saving increases, Social Security, and spousal retirement.
- Buying a Home — Be it buying your first home or perhaps even purchasing a second home in another state, Personal Capital allows you to plan this out.
- College Education — One of the most significant expenses today is college. In some cases, the price tag surpasses the cost of a home.
- “what-if” scenarios — Best of all, the tool allows you to create many “what-if” scenarios with your finances: Increase your savings, see how it performs, or spend less in retirement and see how much longer it lasts.
- Monte Carlo simulation — What separates the good from the excellent retirement calculators is a Monte Carlo simulation. Using this simulation, the tool calculates every possible outcome of stock market returns from today to retirement and from retirement to you and your spouse's eventual death. It's some heavy mathematics and uses probability, but it will tell you the chances of retiring without running out of money.
2. Betterment's Retirement Savings Calculator
Betterment is one of our favorite robo advisor services. More than just helping you do some hands-off investing, the service takes a holistic look at your financial picture to help you reach specific goals. So, of course, Betterment would have a useful retirement calculator.
To use this free tool, 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.
Further Reading>> What is a robo advisor?
3. Stash's Retirement Calculator
But Stash's Retirement Calculator is also useful for those who want a more thorough view, as well. That's because you can choose to incorporate several assumptions into the mix. These include how much of your current income you expect to need in retirement, your investment rate of return, life expectancy, and inflation. By making informed estimates here, you'll get a much better idea of where you stand when it comes to retirement savings.
A tiny minimum investment to start — only $5 — Stash is an excellent choice for beginner investors. If you go for the free Retirement Calculator, you might end up staying for the whole service.
4. Facet Wealth Retirement PlannerFacet Wealth. This service connects you with a dedicated financial planner who can help you with your retirement planning and make sure your assets are in check. They can also manage your investment portfolio.
5. CountAbout's FIRE Widget
Short for Financial Independence and Early Retirement, FIRE tools help you track how close you are to retirement. CountAbout's FIRE widget that tracks your monthly expenses along with any potential passive income and plots them over time. So, for example, if you are mostly invested in stocks, it will show the potential amount you have versus your expenses so you will know when you are financially independent. 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.
6. Charles Schwab's Retirement Savings Calculator
Charles Schwab may be the granddaddy of discount stock brokers (it's nearly 50 years old!), but that doesn't mean this service hasn't kept up with the times.
Schwab's website offers a free calculator that can help you figure out where you stand today and what you need to do to hit 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.
We rank Charles Schwab very high when it comes to customer service, and it doesn't stop short here. There's a 24/7 chat box to help you work your way through the calculator.
7. Fidelity's myPlan Snapshot
myPlan Snapshot may not be as comprehensive as Personal Capital's Retirement Planner, but it can give you a quick, down-and-dirty glimpse at your financial future. All you need to do is enter your age, annual savings, annual income, and the value of your total investment portfolio. Fidelity will then create a visual representation of your projected assets in future dollars.
You don't need to sign up to Fidelity to use the calculator, but if you decide to become a customer — or if you're one already — you can use the data to create a more comprehensive plan.
8. Vanguard's Retirement Nest Egg Calculator
The Retirement Nest Egg Calculator requires only four inputs:
- How many years should your savings last?
- What is your savings balance today?
- How much do you spend each year?
- How are your savings allocated?
Since it's not going as in-depth into your financial picture as, say, Personal Capital does, you won't get quite as comprehensive a result. You'll get a graph that tells you how long your savings will last. Still, it's a great quick snapshot if you need a good idea of whether or not you're on the right track.
Further Reading: Vanguard Personal Advisor Review