Calculating how much money you will need to live comfortably in retirement is a difficult task, especially when the number seems unattainable. But simply doing a retirement-needs calculation caused 44 percent of workers to save more, according to an Employee Benefit Research Institute survey released today. Employees who established a retirement planning goal report saving or investing more (59 percent), changing their investment mix (20 percent), reducing their debt or spending (7 percent), enrolling in a retirement savings plan at work (5 percent), deciding to work longer (3 percent), and researching other ways to save for retirement (3 percent).
Yet only 47 percent of workers say they or their spouse have tried to calculate how much money they will need to retire comfortably. Calculation methods included doing their own estimate (35 percent), asking a financial adviser (33 percent), using an online calculator (15 percent), filling out a worksheet or form (9 percent), guessing (8 percent), and reading or hearing how much would be needed (7 percent). (Multiple responses were accepted.) Predictably, workers also arrived at wildly different numbers.
But there's no one-size-fits-all calculation. According to the survey, an ideal retirement calculator would ask for seven to 10 pieces of information, give a personalized answer to fit an individual situation, and offer a range of answers based on different scenarios.
Do you have a favorite retirement planning calculator? If so, please share it below. Or try EBRI's calculator.