Are you interested in seeing where you stand when it comes to retirement? Do you want to see if you are on track or falling behind? Try a retirement calculator to help you answer these questions.
In years past, to get access to powerful retirement calculators, you had to hire a financial planner who would run an analysis for you. But thanks to technology, things have changed. You can now run your own retirement projections yourself for free.
Before you think these retirement calculators are stripped down versions of more powerful software, you are wrong. They are as good as what the professionals use. Let’s take a look at what is out there so you can pick the best retirement calculator that meets your needs.
3 Free Retirement Calculators to Try
The Firecalc retirement calculator is used by many people looking to retire early, which is where it gets its name from. FIRE stands for “financial independence, retire early”. The great thing is that you don’t need to have any desire of retiring early to use and benefit from this free calculator.
In fact, this is the most in-depth calculator I have come across. It basically runs a monte-carlo simulation for possible outcomes to give you the average or most likely outcomes for your finances in the future. When I was working for high net worth financial planning firm, these are the simulations we would run on client portfolios.
There are many inputs in the FIRECalc, but it is all basic and straight forward, meaning anyone can use it. You don’t need a degree in finance to understand it. For example, you input the following information:
- Annual Spending
- Portfolio Value
That is all you need to enter for a rough idea of your future finances for retirement. But you can customize it for your situation too. You can enter in Social Security income or pension income if you would like.
You can adjust inflation and how much you will be spending out of your portfolio each year. You can customize the FIRECalc based on your portfolio allocation as well as make large lump sum additions or subtractions. For example, let’s say you plan to take $20,000 from your portfolio to pay for your child’s wedding. You can specify this amount and the year so your retirement projections are accurate.
You can even adjust the settings if you aren’t retired yet. This is powerful. You get to see the likelihood of where you stand now and what your chances of a secure retirement look like.
2. Personal Capital
Personal Capital is a free service you can sign up for that aggregates your accounts into one place. Think of it as Mint.com for your investments. Included in the account aggregation is their retirement calculator.
In many ways, it is just like that of FIRECalc. It runs a monte-carlo simulation to give you an idea of your chances of success in retirement. However it is a little more limited in the options you can customize.
You can adjust the following settings:
- Savings Per Year
- Social Security Income
- Retirement Age
- Retirement Spending
As you can see, the options for adjusting variables are limited, however these are the more important options that will have an impact on your retirement finances.
Also, while it is more limited than FIRECalc, many users will find this calculator more user friendly. The interface of FIRECalc is basic and it can be overwhelming to input all of the different variables. I would suggest you check out FIRECalc first and then give Personal Capital a try if you want something more basic to use.
Of course, if you want another basic option instead of Personal Capital, I have just the calculator for you to try.
3. Vanguard Nest Egg
Vanguard also has its own retirement calculator for you to use as well. Most people don’t know about it because it is not on the personal investors area of the website but rather in the section for retirement plans. But that doesn’t stop us from using it!
As with the other retirement calculators presented above, the Vanguard retirement calculator one also uses a monte-carlo simulation. It also limits what variables you can change as well.
In fact, you can only change 4 settings:
- Portfolio Balance
- Annual Spending
- Portfolio Allocation
Once you input these variables, Vanguard will run the simulation and show you your probability of success.
While this calculator is limited in the variables you can change, I feel that this one is a great starting point. First, because it is basic it will not overwhelm you. Second, it is a great option for those who just want to input their data anonymously and not sign up for a free Personal Capital account.
However, I feel it won’t give you the most accurate findings since it doesn’t take into account as many things as FIRECalc does. But, it gives you a general idea and that is better than having no idea at all.
While there are many free calculators for you to try out, I like these 3 because of the use of monte-carlo simulations. They run so many projections so you can see the best, worse and most likely scenarios for your retirement finances. Plus, you can choose which one works best for you based on how much detail you want to input and how precise of a final result you want to see.
While they all have their advantages and disadvantages, overall they all offer you a clear picture of what you can expect your finances to look like in retirement.
Try out all 3 and see which one you like the most. Don’t feel like you need to try one over the other either. In some cases, you might find FIRECalc to be too much. This is fine. Try out the other two instead.
As you get more comfortable using the calculators, you might find you want the ability to customize more and go back to the FIRECalc. This is fine too.
The goal is for you to get a clear picture of what your finances will look like in retirement so that you can start making any necessary changes or adjustments now to improve your chances of success down the line.
The sooner you begin to run these numbers, the greater the chance of you retiring when you want and doing so comfortably.
Have you tried all three retirement calculators? Which one do you like the best?