Kelley Rating (one asterisk = lowest, to five asterisks = highest):
- Ease of navigation, design of interface and learning curve *****
- Instructional documentation and help system ***
- Carries out the goal of the product as advertised *****
- Overall usefulness ****
VestingPoint.com’s Retirement Calculator determines the odds of whether you’ll have enough money to reach your retirement goals. This web-based facility does a variety of standalone calculations related to retirement planning. It runs your personal financial situation through a range of scenarios based on the data you enter.
The publisher suggests that you first assess your personal financial situation and then hypothesize the changes (increasing your income, spending less, retiring later, etc.) that would improve your situation.
Retirement Calculator addresses your income and spending, including social security benefits; works with asset allocation; calculates stock returns; handles college, wedding and other life event expenses; and adjusts for real estate taxes. It has built-in federal tax tables and uses Monte Carlo simulations in the manner described by InvestorGuide.com. Its projections include pension and job-related plans, as well as work-related and investment income.
This facility is directed toward the individual investor, but could well serve as a means for an advisor to establish a dialogue with a client leading to a discussion of investment and retirement planning strategies.
Retirement Calculator falls between the basic level Internet-based retirement calculators listed in “Latest in Internet Calculators,” Trusts & Estates Technology Review (August 11, 2009), the higher-end retirement software packages, such as “Retirement Savings Planner 2009,” Trusts & Estates Technology Review (Feb. 11, 2009), and the Money Tree products such as NaviPlan Extended, RetirementWorks II and “TOTAL Planning Suite,” Trusts & Estates Technology Review (June 14, 2010).
Retirement Calculatorworks from asset and income summary amounts rather than individual items. It does not generate detailed reports, but offers a highly sophisticated level of calculation. Retirement Calculator was designed by Ehud Israel CEO of infoStrategies LLC.
Competitive Products
Other free online calculators address some aspects of retirement planning:
· TheEntrust retirement planner does a basic projection of your savings needs for retirement from a summary of financial information.
· CNN Money Retirement Planner calculates the retirement consequences of your savings program and investments.
· MSN Money retirement calculator computes savings targets for retirement planning.
· Bloomberg Retirement Calculator calculates retirement projections from earnings and investment returns.
How Does It Work?
Retirement Calculator presents a deceptively simple graphic interface consisting of nine silver buttons that display separate areas for data entry. Clicking on one of the silver buttons brings up a data entry screen consisting of entry prompts, an overview of what the screen is designed to do, brief advice on improving your retirement outlook and help instructions on data entry. The data entry screens consist of the following:
About You: You and your spouse’s current age, retirement age and life expectancy. You may elect to include your spouse in the calculations and may enter a goal for the inheritance you wish to leave to others.
Income: You and your spouse's recurring income, such as current salary. You may also enter one-time incomes by year, amount and description. The income entries are pre-tax and the calculator determines the income tax on your income amounts. You may enter rental income for up to two real estate investments. Each income entry may be adjusted for inflation.
Spending: Here you enter your recurring expenditures by total, or by category, and the percent of that amount you expect to continue spending after retirement. You may add additional categories to the categories already furnished. You may also enter one or more one-time expenditures, such as a wedding or the cost of college. You may enter yearly college expenditures or one lump sum for all four years.
Social Security: Enter the annual amount of social security payments you and your spouse will receive and the social security starting age for each spouse.
Pension and SEP: Enter the projected amount of pension income you and your spouse will receive and the starting ages. You may select that the amounts be adjusted for inflation. Also enter the amount your employer(s) contribute to your Simplified Employee Pension-IRA plan.
House/Real Estate: Enter the present value of your house and up to two other pieces of real estate. You may direct that this value be adjusted for inflation. With regard to the future disposition of your house you may select to: never sell it, sell it if you need to and rent, sell it when you want to and downsize, sell it when you want to and rent. Depending on the option you select you may enter the year of the projected house sale, the percentage of current house value the downsized house will be and the annual rent if your house is sold.
Stocks/Bonds/Cash: Here you will enter the total taxable accounts (for stocks, bonds and cash) for both yourself and your spouse. You may also enter the total of tax-deferred accounts and the total of tax-free accounts separately for yourself and your spouse. Enter the estimated aggregate return for both bonds and cash. You may identify how to handle extra money during any year by directing that you will spend it all, apply it to max-out selected types of plans for yourself and your spouse or save it all in taxable accounts.
Asset Allocation: The current allocation percentage between stock and bond amounts you entered is displayed here. Included are suggested allocations for the present time, beginning of retirement and end of the retirement plan. You may direct that the allocations be changed over one year, ten years or never.
Options: You may select from Quick, Normal or Long calculation methods. The method selected affects the assumed accuracy of the calculation results. Here you can enter an amount of cash reserve reflecting the number of months of spending you wish to keep as a reserve. You can enter your state and local income tax rates here.
When you have entered all of your financial information, and made the selections for the retirement strategy you desire, you may calculate the results. The benefit of the program is that it leads you to rework your data and make the necessary compromises in your planning to increase the probability that your plan will accomplish your goals.
What Reports are Furnished?
Click on the Calculate button and the Retirement Calculator simulates your financial situation against a number of scenarios. It displays the message “In XX% of the scenarios you have enough money for retirement.” This display represents the number of times the calculations determined that you had met your goals at the end of your retirement plan based on the number of random scenarios the Retirement Calculator generated. The accuracy reflects the calculation mode selected at Options. You may than change any entries and selections to do “what-if” projections to increase the likelihood of reaching your retirement goals.
What About Help and Support?
Each screen has instructions for each field of data entry that is revealed by clicking on the plus sign at Fields. Each screen also includes brief retirement advice relating to the subject matter of the screen and a brief description of how the Retirement Calculator uses the data you enter. You may submit questions on the operation of the program via email.
Where Do You Get This Software?
The new user price for an annual subscription to Retirement Calculator, Professional Edition is $18. If you would like to try the product before purchasing it, a free seven-day trial is offered on the publisher’s website.
This service is available from:
InfoStrategies LLC
Website: https://www.vestingpoint.com/
Bottom Line
Retirement Calculatorprovides a quick, dramatic reflection of the user’s likelihood of reaching his retirement goals. The discipline of gathering financial information and making the required choices will aid the user’s thinking toward retirement.
Trusts & Estates magazine is pleased to present the monthly Technology Review by Donald H. Kelley -- a respected connoisseur of the software and Internet resources wealth management advisors use to further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo. and is of counsel to the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte, Neb. He is the co-author of the Intuitive Estate Planner Software, (Thomson-West 2004). He has served on the governing boards of the American Bar Association Real Property Probate and Trust Section and the American College of Tax Counsel. He is a past regent and past chair of the Committee on Technology in the Practice of the American College of Trust and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions on the tech resources available in the practice today. His columns are edited for readability only. Send feedback and suggestions for articles directly to him at [email protected].