Fidelity's New Tool Ranks Savings Priorities

It wants you to focus on retirement before other goals, and then college for kids.

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Do you know where you would put your next available $1? Would it pay off credit card debt, go towards your kids' college education, or fund an emergency savings account?

A recent Fidelity survey found that one out of three Americans don't know where to put their next dollar of savings, even though more people are trying to save. The survey also found that 80 percent of Americans have started spending less and almost half have started saving more for an average of $200 additional savings each month. To help people figure out where to put that money, Fidelity designed a " savings planner," which anyone can use for free. I took the new planner for a test drive. First, user-friendly graphics had me "click and drop" my priorities. I listed retirement, mortgage debt, my auto loan, and college. The options weren't perfectly suited to my lifestyle -- for example, I said "mortgage debt" but I really meant "down payment fund" -- but seemed to be close enough. Then, the planner told me that I should rearrange my priorities so I focused mainly on retirement and college, which is somewhat amusing since I don't even have children yet. Should I already be saving for their future educations? Instead of paying off my $400 per month car loan, or saving for a down payment?

Next, it told me to contribute the maximum to my workplace plan, even though I had just told it that I was already doing so. It also suggested that I open a 529 account for my non-existent children.

Bottom line: The new savings planner is a fun tool, but it still has some kinks that need to be worked out.