Why Retirement Calculators Could be Lying to You

Have you ever used a retirement calculator online? You plug in your age, your savings, your maybe your income, and out pops this pretty little number that shows that you are on the right track for retirement, or you’re headed for trouble. Well, I’m here to tell you the truth on those retirement calculators, they could be lying to you. And they’re not malicious. They’re not to get you, but they are dangerously oversimplified. And if you end up relying on this plan for the next 30 years, you could be headed for a little bit of trouble or blindsided by a future that you weren’t prepared for. So problem number one is, these calculators use generic assumptions. And here’s the issue. Retirement calculators use the average lifespan the average spending average inflation, average market returns even. And let’s face it we are not average. What if you live into your 90s. What if inflation goes above that retirement calculator quote. What if you decide that you want to travel the world, and you also want to give some money to your grandkids for college? A calculator won’t ask you those questions. It gives you a one size fits all for a one of a kind life. And in retirement, there are no do-overs and you can’t afford to have a close enough estimate. That’s why we created the Retiring Well YouTube channel. There’s lots of good tidbits in there that can give you some sort of insight on some questions that you should be asking yourself for retirement. So feel free to like and subscribe. Go to our YouTube channel. And then problem number two, they ignore tax strategies. They assume that you have a flat tax rate your entire life. And that is just completely wrong. If your money is in pretax accounts like a 401(k) or a traditional IRA, taxes could hit you hard. If you keep that all the way up until retirement, especially when required minimum distributions start to set in. And then what about Social Security? What about those taxes? What about Roth conversions? There is just so many different tax strategies, or so many different aspects of taxes that those retirement calculators cannot give you. So if you don’t have plans for taxes in retirement, I would definitely recommend to go and speak to a licensed professional on this. We’d love to get a real plan in place for you if you come visit us in any one of our Northern Michigan locations, we offer tax planning strategies and financial advising as well. And then problem number three is, they don’t adjust for risks or life changing events. Let’s say your spouse passes away when you just don’t expect it. Let’s say that markets don’t return as much as the investment calculator says it’s going to. Life can be so different from what those calculators can project. So for health care costs, even those health care costs could be a lot higher than what those projections are for that retirement calculator. So a good plan doesn’t just plan for the best. It plans for the worst as well and gets you prepared for that. That’s why we invite you to sit down in any one of our Northern Michigan locations. And we can talk about a comprehensive plan that is tailor-made to you that we revisit over and over again as the years progress, so that it is always going to work with you and you won’t have any surprises over the years. So let’s recap. Retirement calculators oversimplify the future. They ignore taxes, personalization, and real world risk, and they lull you into a false sense of security. You deserve better. You deserve a personalized plan, not an algorithm’s ideal of it. So don’t rely on a calculator to tell you what your future will look like. Subscribe to our YouTube channel for some really good beneficial information, and/or give us a call for a free consultation to sit and talk to you about a personalized plan, or you also can visit us in person at any one of our Northern Michigan locations as well, to take that guesswork out of retirement.