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By George Hager
Washington Post Staff Writer
Sunday, September 26, 1999; Page H7

Want a Shock?
Do the Numbers Online
I never thought much about retirement until I started opening my monthly individual retirement account statements and saw numbers that made my eyes pop. A few more years of this, I thought, and I could be on a beach somewhere, writing the great American novel. How big would those accounts really have to get before I could seriously consider retiring?

Answer: A lot bigger. Numbers that look good on an IRA statement don't necessarily impress the cold-eyed calculation engines in the three software packages and the three retirement planning Web sites described here.

Anyone musing about the idea of retirement would do well to consult any of these programs, all of which perform the complex calculations -- Am I saving enough? How long will my savings last? How long until I can retire? -- that will let you know whether you're on track.

With one exception -- the ESPlanner software -- these tools are variations on the same theme. You tell the program how much money you've got in IRAs, stocks, a pension and so on, how much you make now, when you'd like to retire, how long you're likely to live, and how much money you think you'll need to live on. The program crunches the numbers and tells you whether you're in good shape or not. If not, it advises you how much more you ought to be saving.

The biggest difference between the programs is sophistication -- software generally allows for more power and complexity than Web site calculators, plus they save your plan and let you come back to tweak it over and over again; most Web sites don't do that.

It is crucial in doing this to remember Remember the old computing maxim: garbage in, garbage out. These calculators are only as good as the data you feed them, and it's a good idea to be conservative.

For example: I invented a $500,000 stock portfolio and fed it into a terrific little calculator at Pretend I plan to retire tomorrow and expect to live another 50 years. At 3 percent inflation, I could pull out almost $22,000 a year in inflation-adjusted dollars for the rest of my life. But at 6 percent inflation, that would drop to only about $12,500 a year. Ouch.

The moral: If a program tells you you can retire tomorrow, fiddle with "what if" scenarios to see what would happen if conditions turn out to be worse than you expect.

Leave it to the Web to boil retirement down to the fundamental question: "What's for dinner on your 80th birthday?" asks the Optimal Retirement Planner Web site. On one side, a depiction of a sumptuous meal with shrimp, roast turkey, pie and a bottle of wine. On the other: a can of dog food.

Social Security was supposed to prevent us from having to spend retirement subsisiting on Alpo. But the demographic pressures building on the federal retirement plan as the baby boom approaches retirement age, and indeed the growing retirement anxieties of the aging boomers themselves, have spawned a zillion Web sites devoted to helping you figure out how to plan ahead.

No one will mistake these Web-based calculators for their more complex software brethren, but they are extremely useful, and on many sites they are surrounded with all sorts of helpful articles and advice. Best of all, they are free. Here are three I looked at, ranked in purely subjective order:

The big software maker also provides the best of these Web sites. I actually liked's retirement planner a little better, but Quicken won by saving my data so that I could come back and fiddle with the numbers without having to enter them all over again – a huge advantage.

That said, this is a pretty good calculator in its own right. In some ways it's even better than its $49.95 software cousin, Quicken 2000. For example, I was frustrated with the software planner for making it hard to find guidance about what rate of return I should use on my investments – a number that can make an enormous difference in whether your retirement plan is realistic or not.

On the Web version, right at the spot where you enter your expected rate of return, there's a helpful gizmo that shows you the implications of what you're doing. Very nice.

On the other hand, while the Web version has a good "what-if" analyzer that allows you to recalculate your plan by changing different numbers, it pales in comparsion to the much more powerful version in the software.

This site has an extremely helpful planner, but it would get big points if it offered nothing more than the elegant little calculator on its opening retirement page. Enter the size of your savings, how many years you'll need to draw on them and bingo: The calculator instantly shows you the maximum amount of money you can pull out each year.

The calculator assumes a 3 percent inflation rate and a 7 percent after-tax rate of return, but you can change either or both of those. I got hooked on this gizmo and used it to run through dozens of different scenarios, testing the effect of lower rates of return and higher inflation (very bad) and much shorter retirement years (good, from a fiscal point of view, at least). For example, if I retired tomorrow with an imaginary $500,000 stock portfolio and planned to live another 50 years in an era of 4 percent inflation, I could draw almost $18,500 a year. If I was only planning to live another 10 years, I could draw nearly $57,000 a year.

By the way, this site, like most other Web-based planners and the software versions, advises would-be retirees to think about not counting on full Social Security benefits, especially if they're more than 10 or 15 years from retirement. While the idea of cutting retiree benefits gets little public support in Congress, the notion of its inevitability is so widely held outside Congress that it has become a regular feature of most retirement calculators.

Disorganized and not as helpful as its competitors, this site struggles despite some good features and pithy insights from financial planner Ginger Applegarth: "So you thought buying a house was expensive? Think about this – It's going to cost you four to 10 times as much as what you paid for your home to ensure yourself of a comfortable retirement."

The highlight of this site for me was the life expectancy planner, which is far more thorough than the ones I found elsewhere. On the other hand, it told me I'd only live to 80, and it had the cheek to suggest an ideal weight that was less than I currently weigh. So who asked?

This site's retirement expense calculator was the first one to convince me, step by step, why I'd be spending less in retirement than while I'm working, even if I decided to travel a lot. And its planner was the only one that let me choose my plan from three alternatives that depended on how much I wanted to leave my heirs after I died.

© Copyright 1999 The Washington Post Company

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