Technology is changing the way we manage our money. So called robo-advisors have automated saving and investing, calling into question the value of high cost investment advisors. Several start-ups are automating the financial planning industry, building tools that empower many individuals to become their own CFP. Technology is also changing retirement planning.
Companies have introduced several free retirement tools and calculators for future retirees. These tools help with everything from determining how much to save to understanding how much retirement income your savings will generate.
Here are five of the standouts that are worth checking out.
1. Personal Capital
This free financial dashboard from Personal Capital offers a number of tools that help retirement savers. In addition to a 401k fee analyzer and an asset allocation evaluator, it also offers a proprietary algorithm that calculates a Financial Sustainability Index (FSI).
The FSI calculates how much monthly income your current nest egg will generate starting today. The calculator adjusts for inflation and market performance. For those that link their investment accounts to Personal Capital, their FSI is updated in real-time.
2. Fidelity Retirement Quick Check
For those more than five years from retirement, Fidelity's Retirement Quick Check provides a snapshot of whether you are on track with retirement savings. It also provides suggestions where appropriate to help users get back on track. It's a detailed tool, so plan to spend at least 30 minutes with it. The result is a detailed action plan. There's no need to be a Fidelity client to use the tool.
3. MarketWatch Retirement Planner
MarketWatch's Retirement Planner offers a quick and visually compelling way to see if you are on track to retire. While it's very easy to use and takes just a few minutes, it offers some powerful analysis. It can optimize savings between retirement accounts with matching, other retirement accounts, and taxable accounts. It also shows account balances to age 90. Finally, it provides a number of graphs that make understanding the results very easy.
4. BlackRock CoRI
CoRI by BlackRock takes a unique approach to retirement planning for those between the ages of 55 and 64. First it calculates what BlackRock calls the CoRI Retirement Index Level. Based on your age, this index shows how much you need saved today for each dollar of annual income starting at age 65. The younger you are, the lower the index as you have more time to let compounding work its magic.
Based on your current savings, CoRI also calculates an estimate of your retirement income. Finally, based on your projected retirement income needs, CoRI recommends several asset allocation plans, ranging from conservative to moderate.
5. Vanguard Retirement Income Calculator
Vanguard offers two free retirement tools. The Retirement Nest Egg Calculator and the Retirement Income Calculator together offer powerful retirement planning. As the name suggests, the nest egg calculator is an easy way to determine if your retirement savings will last. While it's an easy calculator to use, don't be fooled by its simplicity. Using a Monte Carlo simulator, it examines 5,000 simulations to produce its results.
The second calculator helps you estimate just how much income you'll need in retirement. While rules of thumb may be helpful for long-range planning, Vanguard's income calculator enables you to refine these estimates based on your specific circumstances.