Number 288 - May 2007

Online Retirement Planning Resources
by Ira Wilsker (Iwilsker@apcug.net), APCUG Director; Columnist, radio and TV show host
Let' s face it; many of us are working hard and mayor may not be planning for retirement. All too many of us are present oriented, and do not adequately plan for our financial future. Whatever your political persuasion or beliefs, social security retirement income is only intended as a minimal safety net, and not a comprehensive retirement plan. Many of my college students have expressed concerns that either social security will not be around for them to collect when eligible, or that benefits will be cut back as the ratio of workers to social security recipients declines.    Many of us are lucky enough to have 401(k) or 403(b) tax sheltered retirement plans, while others among us may have IRAs, either traditional or the newer Roth plans. Many of us blindly accept that our employer will take care of us. Most of us are not independently wealthy, and will have to depend on ourselves to provide for our own retirement, either in part or in full. Very few ofus have a reliable prediction ofhow well off we will be financially at retirement.    There is an old cliche that "information is power", and by having good information and acting on it in a timely fashion, we may have a financially comfortable retirement. Fortunately, the internet has many reliable resources that can help us with our retirement planning, regardless of our current age or fiscal situation. Some retirement planning resources are available from the financial media websites, while others are available online from brokerages, insurance companies, and mutual fund sponsors.    The online service y ahoo has extensive financial information freely available, including a comprehensive personal finance section. One such section is its retirement infonnation at http://finance.yahoo.com/retirement. This page, which is continually updated, is rich in retirement infonnation. Included on this page, as I type this, are topics including a variety of "how to" guides, "questions and answers" on retirement topics, and a variety of financial calculators.    One calculator available for free from yahoo is its online retirement calculator. This online calculator is easy to use and confidential, and does not require any type of registration, but it does ask some very personal questions necessary to provide a retirement solution: current age, income, spouse's income, predicted rate of inflation, desired retirement age, and other pertinent information. While not totally comprehensive, the results provided are a graph showing retirement balance and retirement income and an annualized table displaying age, salary, beginning retirement balance, additional savings required, inflation adjusted desired retirement income, projected social security income, withdrawals from retirement account, and ending retirement account balances. While no online retirement calculator should be counted on to be absolutely accurate in predicting the future, this calculator will at least give the user a ballpark concept of what to expect at retirement under different scenarios.	Money Magazine and CNN have online retirement resources at http://money.cnn.com/pf/retirement/. As I type this, the page is displaying information on 401(k) plans and possible hidden fees which can eat away at returns, how to draw upon a 401 (k) at retirement, information on accepting a pension or lump sum disbibution, "The last 401(k) guide you'll ever need", and strategies for a comfortable retirement. On this page are also links to a variety of calculators to calculate savings nest eggs, debt reduction, a "millionaire" calculator to predict when the user will accumulate a cool million, and other calculators.    Many brokerage houses, insurance companies, and mutual funds have online retirement information. One of my personal favorites is the .'My Plan" available online from Fidelity Investments at www.fidelity.com/myPlan. No registration is required to use this comprehensive calculator. This calculator has a friendly and helpful audio voice accompanying the simple questions asked. The use of a slider to enter information, as well as to demonstrate the impact of any changes is commendable. With only five simple questions, the calculator will demonstrate potential retirement scenarios. Small grey question marks are displayed adjacent to each term used and will open a window explaining each of the terms. The first question asks your age, followed by (second question) your current income. The third question asks how much you have already saved for retirement, followed by (fourth question) an inquiry about how much you are putting aside each month for retirement, including employer conbibutions. The final question asks about your investment style, with the slider ranging from "Short Term" (no stocks, no bonds, 100% cash instruments) to "Most Aggressive" (100% stocks, no bonds, no short term investments). As a solution, the calculator returns a pair ofbar charts showing projected results at retirement if the market does poorly, or if the market performs about average. The calculated retirement goal shown is for 85% of pre-retirement income, poor market conditions, estimated social security income, and no other retirement income. Clicking on the link "Our assumptions and methodology" will give the details on how the projections are determined, based on statistical information.    On the myPlan "Snapshot" projections page are sliders for "Time" (retirement age), "Money" (conbibutions), and "Investment" (style and risk categories of investments). By adjusting these sliders right and left, the scenario will interactively change demonstrating in real-time the effects of the changes. Clicking on the boxes at the top of the "Snapshot" allows the user to vary age, income, and amount of savings, all of which will effect the graph shown.    The best time to have started to plan for retirement was "yesterday". Since "yesterday" is past, we should all plan now for tomorrow. These and other reputable resources may be a big help in our retirement planning.
Number 288 - May 2007