Successful retirement income planning requires the identification of how much you need to retire comfortably, as well as the best investments with which to reach those financial goals. Prior to working with a retirement planner or financial advisor to help you find out what you need, you can use an online calculator to get a rough estimate. Tools like these are created to help retirees and those nearing retirement, especially as some studies have found that 75% of all American retirees do not have an established retirement income plan for when they quit the workforce.
While there have already been prototypes of this kind of online tool in the guise of simple retirement calculators, newer retirement calculators suggest the combination of retirement investments you can use in your portfolio to allow you to replace your working salary in your golden years. If the recommendations are not to your liking, you can also amend the suggestions by replacing bonds with fixed annuities, for instance, and look at the projected results. This process is akin to working with an actual professional investor, who will construct or modify your investment plans based on your preferences, capabilities, and financial goals.
Much like the older retirement calculators found online, you will start with a personal financial assessment that includes an itemized questionnaire that will allow the tool to estimate your future retirement expenses and the investments you will need to reach these goals. Newer calculators will also ask if you are planning to work in retirement, as well as how much work you will be doing, in addition to the emphasis you will place on guaranteed income, liquidity, and leaving sizeable inheritances behind. After you input the answers to questions like these, the tool will then take your assets into consideration, and find out how your capital and income will affect your financial requirements in retirement.
After you have inputted the necessary data (and the tool has done its calculations), it will give you access to a couple of model investment portfolios, along with the option to compare these different models in terms of income mixes and side-by-side trade-offs. You will also receive information on the feasibility of the investment strategies your portfolios use in light of favorable market conditions on one hand, and a negative economy in the other. Upon receiving the approximate data the retirement calculator was meant to deliver, you can make better and more informed retirement income planning choices with a certified retirement advisor or financial planner.