Comprehensive Approach Big Plus for Retirement Planning Software
The news was worth the wait. Based on our goals, the money we've saved and how much we spend, my wife, Georgina, and I should be OK in retirement even if our investment returns are below average, inflation runs high, or we face high medical expenses.
That's the conclusion of RetirementWORKS2
The online program -- see Web site http://www.RetirementWorks2.com -- provides detailed information you simply can't get from the plethora of free but superficial and potentially misleading retirement calculators on the Internet.
"We cannot do this by asking just a few -- or even a few dozen -- easy questions," the program's user's guide states. "We need a good deal of information to generate even a relatively basic plan responsibly."
That's information about your financial goals, your family, your assets and debts, income and expenses, estate and legacy plans and your health, including whether you have health and long-term care insurance and what the coverage limits are. Although my financial records are well organized, it took me three hours over four sessions (you can stop and pick up where you left off) to answer everything.
Rather than a turn-off, I find such detailed questioning a reassurance that a program is factoring in all relevant information before spewing out conclusions and recommendations. Another program I reviewed recently, ESPLanner (www.esplanner.com), also asks for detailed information to be able to recommend annual spending, saving and insurance targets to achieve a stable lifetime standard of living for each person in the household.
Unlike ESPlanner, which would appeal to adults of all ages, RetirementWORKS is specifically designed for those approaching or entering retirement. "We are trying to serve people who are close enough to retirement they are starting to think about it seriously," said
The mere fact that the program requires you to provide a lot of information -- including stating your current goals and concerns, and desires and preparations for what happens after death -- forces you to think seriously about these issues. The program does a superior job of framing questions in plain English and tailoring the approach based on whether users are comfortable with numbers or prefer to deal in words and concepts whenever possible.
Still, things can be simplified only so much before they are dumbed down, and the software does not fall into that trap. "Some questions are inherently complicated," Yanikoski said. "If you are the person in the family that pays the bills and pays the taxes, then you should understand all these questions."
Like ESPlanner, RetirementWORKS does not recommend specific investments or products so you don't need to worry about conflicts of interest. For Georgina and me, among other things, it recommended we keep our credit card balances always paid up (we do) and that we consider converting, in whole or in part, our traditional IRAs to Roth IRAs to save on future taxes (we already planned to).
For people with not enough savings, the recommendation will often be working longer if possible and/or spending less. "A lot of financial analysis assumes people are not willing to reduce their lifestyles," Yanikoski said. "In reality, if people have to, there will be a period of adjustment but they'll discover they can live with less. A lot of Baby Boomers are going to have to."
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