Liz Weston MY TWO CENTS
Does
Your Plan
Add Up?
. vanguard.com/us/
insights/retirement/tool/
retirement-expense-work
sheet) can help you predict
future expenses by itemiz-
ing your current expenses.
Then you can “stress-test”
your plan using a retire-
ment calculator.
I’ve tried dozens of these
calculators over the years;
one of my favorites is the
latest version of T. Rowe
Price’s retirement-income
calculator (troweprice
.com/ric). Many calcula-
tors use (or make you
guess) fixed rates of return
for investments. But the
T. Rowe Price calculator
simulates various mar-
ket conditions to better
predict whether you’ll
run out of money. The
Preparing for Retirement
option lets you specify
how much you’ll spend
in retirement—a more
precise approach than the
one-size-fits-all number
used by calculators that
assume your future spend-
ing will be a set percentage
(usually 70 to 80 percent)
of what you spend now.
You’ll still want to run
your plan past a fee-only
financial planner (for more
on how to choose one, see
page 57), but these tools
offer clear insights about
whether you’re on track. ;
Tools for better
budgets
Look Into
the Future!
FROM TOP LEFT: ART STREIBER ; ILLUSTRATIONS BY OWEN GATLEY
Even the best-laid retire- ment plans can be hijacked by reality. But you can improve the odds if you run your numbers through the right online tools. Start with AARP’s Social Security Benefits Calculator ( aarp.org/socialsecurity benefits), which can help you determine the best ime to claim your benefits—and how big a check to expect. Embedded in the AARP calculator is a link to the Social Security benefit estimator, which, unlike most online retire- ment calculators, gives you amounts based on your actual work record, rather
than estimates created
from your current income.
Your next step: Figure
out your retirement costs.
Vanguard’s interactive
worksheet (personal
Cut expenses.
Every $1,000 you
cut yearly means
$25,000 less you
need to save for
retirement.
Meet with a fee-
only financial
planner when you’re
within 10 years of
retirement to fine-
tune your plan.
TAKE
3 STEPS
CLOSER
TO Retirement
Dear Liz: We’re about
10 years away from re-
tirement, and we think
we’re saving enough,
but how can we know for
sure? The crazy stock
market isn’t exactly
helping our confidence.
Need help predicting
retirement expenses?
Personal-finance soft-
ware such as Quicken
or Mint.com can help
you trim your current
spending by tracking
credit card and bank
transactions. (Note:
Mint users must
provide usernames
and passwords.) To
anticipate future bills,
ask yourself: Will you
still have a mortgage?
(Check out AARP’s
mortgage-payoff
calculator at aarp.org/
mortgagecalculator to
find ways to pay down
this debt sooner.) Will
you be covered by
Medicare, or will you
be paying for other
health insurance? Will
you downsize? Moving
to cheaper housing
will dramatically lower
your living costs.
Visit
Medicare.gov
to get an
estimate of
your premium
costs.
GOT A MONEY
QUESTION?
Let us know what’s on your mind at
aarp.org/askliz.
