While online apps and programs are not usually adequate substitutes for live human financial advisors who can help you navigate the complexities of planning and , there are several steps you can take on your own to ensure you’re ready for a comfortable post-work life. There are many apps and online resources that individuals can use to assess retirement scenarios and track their savings progress.
When looking for potential apps to track and complement a comprehensive retirement savings strategy, or financial plan drafted by an experienced professional, you should prioritize those that have full mobile functionality, two-factor authentication, and the ability to track progress for multiple financial goals. Below are five apps that meet this criteria which can help optimize your retirement planning.
Mint is not only great for tracking retirement savings goals but is a comprehensive budgeting and financial management app that allows you to establish and track multiple goals simultaneously. For instance, you can set up a retirement savings plan and track the progress toward reaching your ultimate goal while also saving for a new home or working to get out of credit card debt. The app also provides push alerts for upcoming bills and rate changes.
Mint’s intuitive platform also provides insights into how you can save more to achieve your retirement goals more quickly. After importing your banking account data and investment profile, the app analyzes and categorizes your spending habits to highlight unnecessary spending.
Mint is free and available on both Android and iOS devices.
Fidelity Retirement Score
While not an app, the Fidelity Retirement Score is a useful retirement planning app for investors of all ages as it presents an estimate of how much money you might have in retirement based on your current savings and spending habits. The online resource then compares this projection with how much you’ll actually need to save. It also allows you to make subtle changes to see how they would affect your savings projections.
Retirement Score is operated by Fidelity Investments and can be found on its website. However, you don’t need an account with the online brokerage to use the service. After you answer six questions, including your age, investment style, and how much you save each month, Fidelity provides an assessment of your plan’s effectiveness, indicating whether it needs attention or is on target.
Wealthsimple is an ideal app for first-time investors as the app features a clean and simple interface and presents retirement progress with easy-to-understand charts and graphs. It also has relatively low fees with no minimum account deposits, meaning you can open a Wealthsimple Basic portfolio and start investing with as little as $1. It also simplifies the investment process for inexperienced investors, offering a diverse range of exchange-traded funds (ETFs).
In addition to its Basic account, Wealthsimple offers Black and Generation accounts for more sophisticated and experienced investors. These have lower fees and offer more benefits, but are for accounts with more than $100,000 and $500,000, respectively. Even with a Basic account, however, investors are granted one free phone call with an advisor to assess their investments.
Vanguard Retirement Nest Egg Calculator
Unlike the aforementioned apps and resources, the Vanguard Retirement Nest Egg Calculator is geared toward recent retirees or those nearing retirement. The free app looks at a variety of data and uses a Monte Carlo analysis to predict whether or not the user will have sufficient savings to cover the rest of their life in retirement. The Monte Carlo method involves a series of simulations with specific parameters to determine the likelihood of certain outcomes, e.g., the odds of a portfolio of 50 percent bonds and 50 percent stocks providing enough money for a retiree over a 30-year period.
“Monte Carlo simulations … do a better job explaining the potential outcomes versus time-value-of-money calculations, such as future value,” notes David Blanchett, head of retirement research at Morningstar. “Future value will tell you the expected value of a portfolio given its present value, years to grow, potential cash flows and growth rate. The problem with a future value calculation is that it treats the outcome as certain, while in reality, and especially with the markets, nothing is certain.”
Conversely, the Monte Carlo method might find out that the aforementioned investing scenario provides sufficient cash for 800 of 1,000 scenarios. This suggests the investor, with their current strategy, has an 80 percent chance of not running out of money in retirement.
Financial Engines’ Social Security Planner
Social Security, a federal program designed to complement retirement savings, is an important retirement planning consideration. Depending on when you were born, you can begin collecting full Social Security benefits at either 65 or 67 years old. You can start collecting it at 62 years old, but the monthly payments will be reduced.
The free-to-use Financial Engines’ Social Security Planner utilizes mathematical algorithms to tell you when it’s best to start claiming Social Security and how to maximize its benefits.