The Ultimate Retirement Calculator (and it’s free)

The Ultimate Retirement CalculaorPersonal Capital first introduced what is by far the best financial dashboard I’ve used. It’s a free online tool that tracks everything from your bank accounts to your investments. It comes with great graphs and charts that show your asset allocation, investing costs, and cash flow. Now they’ve introduced an equally impressive retirement calculator.

I spent some time using the calculator. Here’s what I like about it:

  • Automation: Unlike many retirement calculators, there’s very little information to enter. Once you’ve linked your investment accounts to Personal Capital’s Financial Dashboard, it has most of the data it needs to run its simulations
  • Monte Carlo Analysis: It doesn’t just assume a set return on investments. Instead, it takes the investments you have, calculates the average return and beta (variability of the return), and then runs 5,000 hypothetical return scenarios. The result is a probability calculation on the likelihood that you’ll have enough money in retirement. Mine was 93%.
  • Customization: You can customize the calculator in several ways. For example, while it assumes a 4% rate of inflation, you can change that assumption. You can also enter spending goals, such as the cost of a trip around the world in retirement.
  • Social Security: The calculator takes into account social security payments, and enables you to set the payments to specific amounts if you want.
  • Beautiful Graphs: Like the financial dashboard, the retirement calculator comes with beautiful graphs that easily communicate a lot of data.

To give you an idea on the graphics, here’s a graph from my results:

Personal Capital Retirement Calculator

Customizing the Retirement Planner

There are several important ways you can customize the planner to fit your specific situation. First, you can change the assume tax rate on retirement withdrawals, the inflation rate, and your life expectancy. If nothing else, changing these assumptions is important to understand just how sensitive the outcomes are to these three assumptions.  Changing the inflation rate assumption from 4% to 3% made a huge difference in my projected retirement account balances and increased my odds of having enough money in retirement to 97%.

Second, you can customize the assumptions about social security. You can change the timing of when you and your spouse will start taking social security and the estimated amount of the benefit.

Finally, you can change the assumptions about how much you’ll save each year. You can set your savings rate to automatically increase by a set percentage each year. And you can set spending goals in retirement.

To give the free Retirement Planner a try, log into your Personal Capital financial dashboard. If you’ve never signed up for the dashboard, you can do so for free with this link.

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Topics: Retirement Planning

9 Responses to “The Ultimate Retirement Calculator (and it’s free)”

  1. David Farr

    Yes, nice easy tool. The only issue for me is that I couldn’t figure out how to set income in retirement, such as pension, for cost of living adjustment, COLA. As my pension does not have a COLA it’s benefit will decrease over time. In this case the tool doesn’t give a true picture for how much investment will be required to retire. Maybe the feature exist, but I couldn’t figure out how to use it.

  2. Mike Derge

    No – but you do have to link bank accounts before you can continue. The amount of personal information you require for a basic planning tool is overboard.

  3. Thanks for the insightful article. I agree Personal Capital is a great financial management tool. Many of the retirement calculators are difficult to use. There are of course assumptions built in and you have to play around with it before you get the information you are looking for.

    Great article, thanks.

    Laura Beth

  4. Thanks for the review, Rob. I agree that Personal Capital offers one of the best personal finance tools and retirement calculator. Unfortunately, it only works for U.S. based financial institutions. I’ve been trying to find something similar for international users, but had no luck so far.

  5. The tool wants your phone number, your bank account info, access to all your investment accounts and your credit card data. What?? You are just asking to get hacked. But don’t worry, nobody ever gets hacked. Ever. Especially established financial companies with extremely valuable customer information.

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