Use it as a starting point to get a picture of how much you have and how much you need for retirement.How to make your retirement calculator work for you: If it tells you that you'll die with $170 million in the bank, you're probably on a good path (but continue to monitor). If your retirement calculator says that you can't retire for 112 years, then you know it's time to make some changes. The results should be seen as an estimate and starting point that shows if you're on track or not. But how you use (or misuse) the results is the key. Again, that doesn't mean retirement calculators are not valuable. Since the inputs are guaranteed to be inaccurate, it's safe to say that the results will be too. And even the smallest error on a rate of return or interest rate can make a huge different in the calculations. Who knows how long you'll live, or how much you'll spend in retirement each year? The calculator estimates the inflation and returns, but it's just that: an estimate. All the information is wrong: It's true. The calculations are dependent on pure assumptions.
A few calculators I like are: NewRetirement, Vanguard, Bankrate and Fidelity. The more input the calculator analyzes, and the more freedom the tool provides to play with the numbers and compare multiple scenarios, the better. Most failed because they were too simplistic. In a recent study, researchers who tested 36 online retirement tools gave only 11 a passing grade. As you probably know in your own research, some calculators are better than others.
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