Am I saving enough? Can I afford it? What if I run out of money?
These are reasonable questions, and there aren’t enough good answers. But a comfortable retirement, or planning for one, shouldn’t be as angst-inducing as we all make it.
To that end, we’ve recently launched Retirement Planner from SmartMoney, a visual retirement planner that lets you test out different retirement scenarios, from the very simple to the very complicated. Work another year. Move investments around. Nix social security, get an inheritance, sell a house.
There’s a lot here we think you’ll like. Instead of bombarding you with outputs and spreadsheets, our Retirement Planner shows you exactly how your money is growing and how it is being spent.
But, like all such tools, it does allow you to play God. Want 7% annualized returns in your stock portfolio? You can make it so. But we don’t think that’s any worse than most of the simulators out there, which use a sophisticated – but fallible – statistical algorithm to give outcomes and probabilities based on historical market returns. We chose to let you see and learn more by rolling the dice on your own. Just open up “Advanced Settings” in our tool and adjust your return assumption or tax rates.
Still, there are some rules. You are penalized, like in real life, for taking Social Security before your full retirement age. You can’t (yet) make early withdrawals on your 401(k) and IRA. Taxable investment accounts only pay capital gains taxes on drawdowns. And bank accounts and CDs earn interest, every year, and pay taxes, every year.
We’re going to continue to enhance the tool, so your feedback is important to us. What’s most important to us is that this tool and other retirement features here at SmartMoney (including this blog) help you make better decisions about living in or working towards retirement.