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Online retirement calculators come in all shapes and sizes. Some retirement calculators are extremely simple and provide little in the way of helpful information you can use to plan for retirement. Others are complex affairs that require an advanced degree from MIT to use. What follows are 11 online calculators for retirement that get it just right. They are easy to use, provide a lot of useful information, and best of all, are free.

IRA Calculator

Morningstar’s IRA Calculator is a nifty 3-in-1 calculator if you have or are considering opening an IRA. First, the calculator will tell you whether you qualify for a Roth IRA, a deductible IRA, or a nondeductible IRA. Second, based on how much you plan to save in an IRA, the IRA calculator will tell you how much you’ll have at retirement in each type of IRA. This is a helpful way to assess which IRA is best for you. And third, the calculator will help you determine whether to roll over an IRA into a Roth IRA. So if you have or are considering an IRA, this is definitely a tool to bookmark.

Online Retirement Plans

Boulevard R offers a unique approach to retirement planning. Unlike most retirement calculators, Boulevard R asks how you want to spend your time in retirement, and uses your answers as part of its analysis. It also offers a very easy user interface and very nice charts and graphics to show you where you stand. At the end it calculates what it calls a Retirement Security Index score.

CNNMoney’s Retirement Planner is like creating an online financial plan. The great thing about this tool is that it’s very easy to follow and takes just a couple of minutes to input your data and see the results. The retirement planner accommodates data for both couples and singles, allows you to estimate retirement needs in dollars or as a percentage of current income, and factors in social security benefits (which it estimates based on your income). The results include an estimate of the likelihood your nest egg will grow to meet your needs. In our case, the calculator concluded that we need to earn 9.3% on average to meet our retirement goals, which it assessed at an 82% chance of success.

Fidelity’s MyPlan Retirement Quick Check is a more detailed retirement planner that uses Monte Carlo simulation to estimate how much money you will have during retirement. Monte Carlo is a mathematical model that recognizes that the stock market doesn’t produce the same rate of return each year. One year it could be up 25%, the next it could be down 15%. And this is an extremely important consideration for new retirees. If the market drops 20% in your first year of retirement, the loss can increase the odds you’ll outlive your money. Monte Carlo simulation looks at thousands of possible market returns over a period of time, and produces a range of results with the likelihood you’ll achieve your goals. Fidelity’s Retirement Quick Check is available to Fidelity clients or those that register with Fidelity.

And if you want to understand Monte Carlo retirement calculators better, check out The Retirement Calculator from Hell by William Bernstein.

Retirement Income Calculators

T. Rowe Price’s Retirement Income Calculator also uses a Monte Carlo simulation to estimate the likelihood your retirement savings will be enough. The interesting feature of this calculator is that you choose the confidence level that your money will be enough in retirement. In other words, you can select 99% for example, which means the calculator will assess whether your savings at retirement has a 99% chance of providing sufficient income for you during retirement. One limitation of the calculator is that you must input how much you’ll have at retirement, but the other calculators discussed here can handle that with no problem.

Fidelity’s MyPlan Snapshot is a nifty online tool to help determine how much you need to save to meet your retirement goals. The tool asks your age, income, investment style, monthly contributions to retirement accounts, and retirement savings. Based on this data, it then calculates how much you need at retirement (it assumes 85% of current income) and how much you’ll have if the market performs poorly or as it has in the past. You can then adjust the age at which you’ll retire, your monthly contribution amount, or investment style to see how these decisions may impact your nest egg at retirement.

Other Online Retirement Calculators

There are literally thousands of retirement calculators available online. The calculators described above should cover most DIY retirement planning needs. But here are few more to check out if you’re looking for other options:

• Dinkytown’s Retirement Shortfall calculator
• Bloomberg’s Retirement Plan
• Yahoo’s How Much to Save for Retirement calculator
• AARP’s Retirement Calculator
• Nationwide’s RetirAbility Check

Recently a reader e-mailed me with the following question:

I definitely do want to open a Roth IRA as soon as possible because I hear it’s typically better than the Traditional IRA. However, I’m not certain whether one should be putting money way in one’s 401K or Roth. As you can tell, I’m not that financially knowledgeable. I do have some credit card debt that shouldn’t take too long to pay off and of course I have some student loans. I’m guessing you’re recommending me to pay off my credit card debt first before opening a Roth IRA. My student loans on the other hand will take a while to pay off.

I receive questions like this a lot, and so today we’ll walk through an approach you can use to answer these questions for yourself.

Read the rest

The IRS each year issues a very helpful and thorough publication about Individual Retirement Accounts or IRAs. Called Publication 590, the document covers traditional IRAs, Roth IRAs, SIMPLE IRAs and other related issues. The IRS just released its 2007 edition (it comes at the end of the year). It’s available as a pdf, but be warned, it weighs in this year at a hefty 108 pages. You can download it here. It’s also available in an html version here, but I much prefer the pdf version. If you’re not interested in trudging through a 108 page tome, however, here is what’s new for 2008.

Traditional IRA contribution and deduction limit

The contribution limit to your traditional IRA for 2008 will be increased to the smaller of the following amounts:

• $5,000, or
• Your taxable compensation for the year.

Read the rest

That’s right, the words helpful and IRS sometimes go together. The IRS has produced a chart showing whether a rollover between 401(k), 403(b), 457(b), IRA, Roth IRA, SEP IRA and SIMPLE IRA accounts is permitted. Clicking on the chart or here will download a pdf version of the chart. The chart includes hyperlinks to additional resources on the IRS website. Read the rest

Year end is a perfect time to give your retirement and other investments an annual tune-up. Each year at this time I evaluate my 401(k), rollover IRA and taxable investment accounts to see if I should make any changes to my asset allocation plan for the next year. Generally, I look at five things: (1) whether my asset allocation plan should be adjusted, (2) whether my investments are tracking to my planned asset allocation or need rebalancing, (3) whether my investments are distributed between my retirement and non-retirement accounts in the most tax efficient manner (known as asset location), (4) whether any changes to the mutual funds I own have been made that might cause me to reconsider my investment, and (5) how my investments have performed over the past year. From this information I decide what changes, if any, need to be made to my current investments and contribution choices for next year.

This annual checkup takes a couple of hours, but is time well spent. Over the next five days we will walk through each of the five steps above. In the process I will show you everything I invest in and my rationale behind each choice. Of course, my investment decisions may not be right for you, but the process will show you how to go about designing an asset allocation plan, selecting mutual funds, and monitoring your choices. Today, we will look at how to build an asset allocation plan, using my asset allocation plan as a guide. Read the rest