ESPlannerBASIC, a free online version of a powerful financial-planning service, has just been developed. Now that the investment dust and damage of the past 18 months is settling, this is an excellent time to take an honest look at your financial future. ESPlannerBASIC is financial planning software that's worth your time and effort.
Even the free version of this tool is no lightweight. You will need to devote a good half an hour providing the information requested by the interactive tool. But it can be very helpful in telling you where you stand in ways that lots of other financial-planning tools do not. Developed by economist Laurence Kotlikoff at Boston University, ESPlannerBASIC is based on a philosophy of "consumer smoothing." It doesn't just tell you how much money you need for "retirement" (whatever that is, these days). It tells you how much you should spend and save every year, and shows you how lifestyle decisions will raise or lower your standard of living. For example, should you rent or own a home? What will your retirement income taxes be like? Is there a better location for you to live, in terms of how state taxes influence your standard of living? At what age should you begin taking Social Security? By looking at different responses to such questions, ESPlannerBASIC can illuminate some big impacts that you might not have considered. In the process, it can help return control of your future to you, and that's a good feeling in any economy.
(I have written about Larry and explained how consumption smoothing works: It's Time to Review Retirement Path.)