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Many Web sites offer calculators to help you
get your finances in shape for retirement.
Retirement planning shouldn't
be a crapshoot. But short of hiring a financial
planner, how can you be sure you're saving enough
to retirement when you want?
Many financial Web sites offer an alternative:
retirement calculators designed to tell you
if you're on track, given your goals and the
amount you've saved.
How good are they? In short,
we found that even the best Web calculators
have limitations. And using several of them
to test your results against each other may
only add to your confusion. One person using
the same information can bet widely divergent
answers. Why is that?
It's easy to make an error
entering numbers. And that will skew the results
Some calculators automatically
include assumptions about inflation and the
future return on your investments; others
let you decide what assumptions to use. The
choices you make can alter the results considerably,
and your assumptions may not be realistic.
Calculators don't always
adapt to every situation. For example, most
ask for information on retirement plans and
pensions, but they may not account for non-traditional
retirement plans, such as profit sharing.
Listed below are some tips
for using these retirement planning calculators:
To spot errors that can
affect the results, repeat the calculation
using the same information.
If you still get a result
that seems wrong, send an e-mail to the Web
site, if possible, and ask for help. If you
can't do that, try a different calculator
or seek help from a financial adviser.
Don't use unrealistic assumptions
to get the result you want. Many calculators
provide guidance about what to use for inflation,
rate of return, life expectancy and the amount
of income needed in retirement.
Repeat the calculation every couple of years
to track your progress.
There are a variety of resources
that will enable you to figure out if - and
when - you can afford to retire. Many Websites
offer interactive worksheets that let you plug
in your age, assets, and other numbers, and
will tell you how to allocate your investments.
Among the best:
SmartMoney (The Wall Street Journal Magazine
of Personal Business):www.smartmoney.com/retirement/planning/
T. Rowe Price Inc.:www.troweprice.com
Retirement Planning Kit 800-638-5660
Retirement Planning Analyzer software ($19.95)
800-333-0740
Vanguard Group: www.vanguard.com
(Retirement Resource Center)
Vanguard Guide to Planning for Retirement
($13) 800-950-1971
Quicken.com: www.quicken.com/retirement/planner
From Intuit, maker of Quicken personal finance
software
The articles and opinions
in this publication are for general information
only and are not intended to provide specific
advice or recommendations for any individual.
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