Planning for Retirement Using Online Calculators Presented by Danielle Walker and Dr. Jean Lown 1

Objectives Be able to: –Use the Ballpark Estimate to figure retirement investing amounts needed –Explore other online calculators –Explain why you should recalculate yearly –Explain why different calculators produce different results 2

Online Retirement Calculators Purpose –Give an ESTIMATE of what you will need to invest for retirement –Or see if your current investments will last your retirement Don’t forget about Social Security! 3

Ballpark E$timate Website – 4

What is the Ballpark E$timate? An easy-to-use two-page worksheet Helps you quickly identify approximately how much you need to invest for a comfortable retirement. 5

How to use the Ballpark E$timate Interactive (on-line) All of the calculations are done for you You just enter the numbers Need to be on-line Non-interactive print the sheets from the web site fill in data & do the calculations on your own. 6

Data Needed for the Ballpark E$timate Current income Age & expected longevity –Planning for a Secure Retirement module 1 – Planned retirement age Percent of income to replace in retirement Health care in retirement Amount of pension –Contact HR office 401(k), IRA balances Estimated Social Security benefits –From annual statement Other retirement income –Work? –Rental income? 7

Social Security Annual S.S. statement (via mail) Full Retirement Age (FRA) no longer 65! –persons born : 66 years – : , 4, 6, 8, or 10 months –persons born 1960 & later: 67 years 62 is earliest age for SS retirement Benefits are permanently reduced for early retirement 8

Decisions… Percent of income to be replaced –How much of your current annual income will you need in retirement? 70% or higher living on a lot less in retirement isn’t what most people want Health & long term care costs are the BIG unknown 9

More Decisions… How long are you likely to live? –Based on family history and health how long do you expect to live? –Web-based longevity calculators Planning for a Secure Retirement

Tips for Couples Each spouse should fill out own worksheet –Divide joint assets each $ resource can be used only once –If one spouse’s SS benefit is less than 50% of other spouse’s; increase the lower annual benefit to 50% of higher earning spouse’s If John $12,000; Mary $4,000 –Increase Mary’s benefit to $6,000 (50% of spouse’s) 11

What % of Income? When determining your goal, you need to think about the type of retirement lifestyle you would like. –Do you want the cruise-of-the-month retirement or are you planning to spend your time in the garden? Plan on health care (LTC) costing far more than you can imagine! –$200,000 for a couple aged 65 12

Planning Jane’s Retirement 13

Ballpark E$timate Note the title: a rough estimate –Re-calculate each year –Individuals less than 10 years to retirement need more than an estimate. need a comprehensive plan based on their individual situation 14

FINRA Has specific instructions for each category ‘Other Income’ category is a little confusing - supposed to include Social Security Makes some assumptions but overall pretty helpful 15

Info needed for FINRA Current Savings Balance Annual Retirement Income Annual Yield Other Income Inflation Rate Current Age Current Tax Rate Retirement Age Retirement Tax Rate Withdraw Until Age Inflate Contributions Are Annual Contributions Tax Sheltered 16

FINRA Website – ation/Calculators/1/RetirementCalc.a spxhttp://apps.finra.org/Investor_Inform ation/Calculators/1/RetirementCalc.a spx 17

CNNMoney.com Very detailed Can add other fields for even more accuracy Can calculate for you and your spouse at the same time Results very specific Results are shown in graph form and contain the probability you will reach your goals 18

Info for CNNMoney.com Current Age Desired Retirement Age Life Expectancy Current Income Typical Annual Raise Desired Annual Income in Retirement Expected Benefits Age Benefits will begin Survivor Benefits Savings info for 401k, IRA, or other retirement accounts Your portfolio volatility 19

CNNMoney.com Website – mentplanner/retirementplanner.jsphttp://cgi.money.cnn.com/tools/retire mentplanner/retirementplanner.jsp 20

TRowe Price Very helpful Tells how much you will need to save every month to reach your goal Does not include Social Security Less info than other calculators 21

Info for TRowe Price Current Salary Tax Rate Inflation Rate Number of years until retirement Number of years living in retirement % of Salary you want in retirement Pretax rate of return in retirement Current investments in taxable accounts Pretax rate of return on taxable accounts Current assets in tax-deferred accounts Rate of return on tax-deferred accounts 22

TROWE Price Website – indexHtml3/0,0,htmlid=902,00.html?s cn=T._Rowe_Price_Calcul&rfpgid=82 78http:// indexHtml3/0,0,htmlid=902,00.html?s cn=T._Rowe_Price_Calcul&rfpgid=

WellsFargo.com This is for people who want to see if what they are doing is going to last their whole retirement Very good instructions Annoying Audio - can be turned off Gives suggestions 24

Info for WellsFargo.com First name Age Retirement Age Current Annual household income Current Retirement Savings Retirement Savings each month Annual income desired in retirement Do you own a home? Social Security 25

WellsFargo.com Website – dex.com/ dex.com/ 26

More detailed on-line calculators Monte Carlo simulation estimates a range of likelihoods of outliving your resources – ecarlo.htm Mutual fund companies – – Personal finance magazine websites – – 27

What if you get conflicting results? Conflicting results are expected! –Due to different assumptions (inflation, rate of return level of detail Is SS included or not Longer time to retirement- more uncertainty –Complete multiple calculators 28

Planning for a Secure Retirement On-line course to help you plan your retirement – ment/ 29

Questions? 30

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