As the great tide of baby boomers starts to settle into life after work, they face a startling reality: They need retirement income.
Are you on track? It used to be that only a financial adviser could say, and even he or she had to break out fancy software to get a number.
Now, the Internet is here to make things simple. You shouldn’t rely on a web site to give you all the answers, but you can get closer to a realistic plan using free online retirement income calculators. There are dozens to choose from, but here are three good ones to try before sitting down with any adviser:
What it does: A relatively new entrant, the tool offered by the investment firm BlackRock uses current interest rates, inflation and other real-time data to come up with a daily index that, matched to your age and current retirement plan balance, projects a potential annual income.
The upside: No assumptions. This is real data and, thus, a more accurate view of things right now. That said, you have check back from time to time. The underlying indices change daily.
Watch out for: You have to be at least 55 to use the data and under 64, so this tool is really only accurate for “pre-retirees” of a certain age.
What it does: Measures a variety of inputs using sliders to generate a potential monthly retirement income target based on hypothetical investment returns. You can toggle on or off Social Security and pension incomes.
The upside: More granular than the BlackRock CoRI tool and useful for ages 21 all the way to 80. Nice visual targeting graph adjusts as you move the sliders back and forth.
Watch out for: Vanguard offers a list of planning caveats and warns that the tool is only a starting point.
What it does: Uses sliders, like the Vanguard tool, but you also can enter data such as home equity and taxable accounts. Graphs let you adjust assumptions to find a retirement age that can be sustained.
The upside: This tool is detailed enough to give you a full view of the likely outcomes of your planning while not drowning you in financial adviser-level detail.
Watch out for: Complexity. There are a lot of underlying assumptions which you can adjust. However, that also means you can adjust them to unrealistic levels.
Whichever retirement income calculators you choose, remember to carefully reconsider your investment risk tolerance. As you near retirement, you lose time to recover from market losses, should they occur.