We’ve been talking a lot about retirement calculators lately, but how do you pick a good one? A Web search for “retirement calculator” will bring you all kinds of free, online tools. But not all of them are equally useful. Some ignore inflation while others assume an overly optimistic view that income will grow by 3 percent a year or that the rate of return on investments will be 10 percent.
I prefer calculators that let you decide all the variables. They require more effort, but then you can see for yourself how a rate of return of 6 percent, or 3 percent, would affect future retirement income. Here are other factors to look out for:
LISTEN NOW: Using Online Retirement Calculators
Over the weekend, I spoke with WTOP radio in Washington, D.C., about why retirement calculators can be helpful and what to look for when choosing one.
If you want to play around with one, check out the new calculator that T. Rowe Price just released. It asks a lot of detailed questions, but I think it’s worth the effort.