How to Use Retirement Planning Software

Retirement Planning Software

Technology can make life a lot easier, and I find that this is true especially when it comes to retirement planning software.

Mental math has never been one of my strong points and I just love the way it lets me throw in a few numbers and get results that I would have taken hours to come up with.

With all the websites out there offering a variety of retirement planning software - IRA savings calculators, online annuity calculators, IRA conversion calculators, Roth IRA savings calculators – how do you know what to choose from this endless list?.

There is so much choice available that it can be confusing to find the right widget that can give you real help. There has to be a way to cut through the clutter.  I have come across plenty of paid retirement planning software programs online and when I checked them out, I found that most of them are need-based, depending on your specific situation.

Let’s take a quick look at some of the most popular calculators:

Traditional IRA Savings Calculator

This retirement planning software program tells you how much you can save in a tax-deferred IRA. When you enter information like your annual deposit amount, number of years you want to save, rate of return and tax rate, you can find out how much money you would have at retirement. If you enter the tax rate you think you’ll be paying when you retire, you can see how much money you’ll be left with after-tax for each IRA withdrawal. Interest on IRAs is compounded annually.

Roth IRA Savings Calculator

This handy little piece of retirement planning software shows you how much you can save if you opt for a Roth IRA. With a Roth IRA, you pay tax on your income at the time of contribution; then, when you retire, you withdraw the funds tax-free entering information like your present tax bracket, how much you can deposit annually, the number of years you expect to save and your expected rate of return. And, when you enter your annual deposit in pre-tax dollars, you can find out what your after-tax deposit amount is likely to be.

Other Retirement Planning Software

There is a Roth IRA conversion calculator that shows you whether you will benefit by converting your traditional IRA to a Roth IRA.   A retirement planning calculator, based on certain parameters, calculates how much you need to save per month to meet your retirement needs.  Online annuity calculators show you the present value of your annuity based on simple information like interest rate per time period, number of time periods and payment amount.

I find that the main issue here is keeping track of expenses and income, and making sure that there is enough money to retire on. The starting point is to develop a good retirement plan and then use the available retirement planning software to show you which investment vehicle is most beneficial to you. 

Retirement planning software has its place in the planning process, but without a full understanding of your retirement goals, you may not get accurate results.

Several factors come into play in retirement planning, and I would suggest that you consult your financial advisor before you make any serious investments.



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