Posted by Jill Boynton on May 1, 2016
Recently a study of 36 online retirement planning tools found that most give misleading advice, often showing outcomes that are far more favorable than the results that would come out of retirement planning software used by financial planners. This could be very harmful to users who may think they are confidently on the path to retire when, in fact, they are not taking the necessary steps.
The calculators ranged in strength from those that were free and required on a few pieces of information to those that asked for more information and charged a small fee for the results. They are offered by various well known and respected financial firms including Vanguard, AARP and T.Rowe Price.
The problem with online calculators is that, in trying to minimize the difficulty for individuals to submit the data needed, they fall short of what is really necessary to provide an accurate projection. Our retirement projections are completed using a robust software that includes detailed information about a client’s income, expenses, assets and liabilities, and also factors in changes that the client expects to experience in the future such as increased medical expenses, downsizing a house or going on an annual cruise – whatever our clients want to build into the plan. It is more inclusive than any online calculator could be. Of course all retirement projections are only estimates of what may occur in the future but the better the data used to build the projection, the more accurate the outcome should be. Buyer beware – you always get what you pay for and if you rely on a free retirement planner you could find yourself short changed!