Online Retirement Calculators: Helpful or Useless?

The whole concept of "retirement" is becoming obsolete and by the time the newest generation hits "retirement age", it will be a not-so-nostalgic joke. The only thing a retirement calculator can do is tell you what you won't have or need should you decide you can actually afford to stop working.

Most people can't.

A lot of people don't want to.

Retirement once came after steady employment at one company for a person's lifetime. They worked their 20 or 30 or 40 years, got a gold watch and went off into 'retirement land'. Today, careers at a company are measured in months, often changing from one company or field to another, often with or without 401K's or some other form of 'retirement' savings that may or may not grow. It's a crap-shoot as to how well one's retirement will hold up and a hold-over from a generation ago when people really had to retire because they could not be productive in their fields of "habit". Today, almost anyone at any age can be productive and earn a wage doing SOMETHING, making retirement income much less necessary.

Further, with life expectancies stretching every year, and with medical breakthroughs to extend life a constant but unpredictable factor, calculating how much you need to save to retire on becomes a fiscal Russian Roulette when it can't be accurately predicted exactly how many more years an individual has left to live. Is budgeting and goal-oriented planning a good idea? Of course. But trying to predict how much of your income today should go into retirement (for those of us lucky enough to HAVE extra income that can be socked away) is merely an exercise in financial tea-leaf reading - and about half as accurate. Sure, you can predict based on a demographic, but retirement happens to individuals, not demographics. It's like predicting death in smokers. You know one third of them will die from a cigarette-smoking related illness, but you can't point to an individual and say they will.

Finally, research has shown that the more involved seniors are in life, and the more interested they are in what they do in daily activities, the longer they'll live. Sitting at home and vegging out usually ends up badly for seniors used to a lifetime of steady work. Having another income through work is mentally, socially and physically more beneficial than enduring a traditional 'retirement'.

Retirement calculators give financial planners an excuse for an existence, but little else. They certainly don't provide any real, or predictable, value to the people relying on them. Teach people how to budget, save for emergencies, and expect to keep working for the rest of their lives, unless they make enough money now to save for a specific time when they stop working.

Saving for a rainy day is useful. Calculating how much money you'll need to sock away in order to retire is impossible, and almost always an exercise in utter futility.

Fatesrider of CA 6:11PM August 04, 2008