Retirement calculators are a nice tool when used appropriately. Remember to look at the big picture.

Retirement calculators are a nice tool when used appropriately. Remember to look at the big picture.

Online retirement calculators can be a great tool for planning your retirement. There are numerous free retirement calculators, such as Ballpark E$timate, and also paid calculators like RetirementWORKS’ RW2 for You.  Keep in mind that an online retirement calculator will not ensure your financial future, but it can help you make informed decisions about your retirement investments.

It’s important to keep in mind that while online retirement calculators can be beneficial, they can also be misleading. Remember that these calculators are making projections based on historical data, which is good for an estimate, but no guarantee of how the future will unfold. Also, an online retirement calculator that is touted for its accurate projections is still subject to user error.

The Variety of Options

There are a variety of online retirement calculators available and each has its own method for calculating your retirement needs. Some use general guidelines to create your retirement data. Others let you input more specific plans such as your various types of expected retirement expenses, and how much you plan to withdraw from your savings during retirement. Some online retirement calculators use one projection and others let you see different scenarios, such as accounting for a future recession.

To find the best advice, it’s wise to use two or more retirement calculators, as each are likely to give you different results. While it’s tempting to think that one calculation is more accurate than the other, discrepancies are not necessarily a bad thing. Between them all, you may have a better picture of how the future may look. Once you choose an online retirement calculator to try, it’s time to begin inputting data.

Other Online Calculators 

This may sound easy, but chances are you will puzzle over many of the required line items. The calculator will have its own guidelines to help you, and you should read them, even if you think you know what to input. As each of your answers will affect your result, it is important that you take the time to understand just what the calculator wants to know.

Many calculators ask you to estimate how long you expect to live but give little guidance on how to determine a reasonable life expectancy. In this situation, most people make the best guess. While that might work, there are better ways to come up with this estimate. Try an online life expectancy calculator such as, and add five to ten years to the outcome to be on the safe side. If you’re more than 10 years from retirement, it’s probably all right to go with the calculator’s default method of turning your savings into retirement income.

But for those who are closer to retiring, it’s time to think about the details of the situation. Do you plan to live off of the interest from your investments? Will you decide on an annual limit for how much of the principal you can withdraw? Be sure you understand how the retirement calculator works and choose settings that will closely reflect your plans for accessing your funds. Retirement investments require careful planning.

Online retirement calculators may help you create the plan that is best for you, and make adjustments as your situation changes. Just remember that it is always better to err on the side of caution. You may not be able to take it with you when you go, but spending your savings too quickly could leave you struggling later in retirement.