6 Tools to Supercharge Retirement Savings
Saving for retirement certainly isn't easy. A recent study by the Transamerica Center for Retirement Studies found that only 18 percent of those surveyed expect to be better off in retirement. While no tool can fully automate retirement planning, there are tools that can offer a lot of help. These six tools can help you save, plan and prepare for your golden years:
1. Personal Capital. This free tool is the Cadillac of investment tracking tools. Not only does it track investment performance, but it also shows you your asset allocation across all investment accounts, including taxable and tax-advantaged accounts. For those with a 401(k), Personal Capital also shows you how the costs of the retirement account affect your ability to retire. The graphs and charts make understanding all of your investments very easy.
2. Money Ratios. Popularized by a book of the same name by Charles Farrell, Money Ratios offers an easy way to determine if you are saving enough for retirement. The simple ratios can show you if your saving rate is sufficient, and if your current nest egg, given your age and income, has you on a secure path to retirement. In addition, the book provides ratios to help you evaluate your debt, mortgage and other important financial planning issues.
3. You Need a Budget. At the heart of both saving for retirement and making your nest egg last in retirement is money management. YNAB is an excellent budgeting tool. Having used it for years, it's helped me actually stick to a budget. In addition to the tool, YNAB offers an excellent series of videos, articles and an active user forum to help you use its tools and better manage your money.
4. Social Security calculator. The Social Security Administration offers a free calculator that helps you estimate the Social Security benefits you will receive in retirement. In addition, you can get a statement from SSA with a breakdown of your contributions and expected future benefit. The SSA also offers life expectancy and retirement age calculators.
5. Retirement calculators. There are a lot of free retirement calculators available online. Some are very simple, while others require more data and undertake a more complex evaluation. One of the most thorough options is the Flexible Retirement Planner. But be prepared to spend some time with the calculator. For example, you can create "what if" scenarios to evaluate how certain life events may affect your retirement readiness. You can also perform a sensitivity analysis to determine which factors will have the greatest impact on your retirement.
6. A credit card. Yes, even the credit card industry has waded into the retirement planning industry. One of my favorite cash back credit cards is the Fidelity Investment Rewards American Express. The card pays 2 percent cash back on all purchases and deposits the rewards in your Fidelity account. It's one of the most rewarding credit cards available today. Now if only other investment firms would join the party.
Rob Berger is an attorney and founder of the popular personal finance and investing blog, doughroller.net. He is also the editor of the Dough Roller Weekly Newsletter, a free newsletter covering all aspects of personal finance and investing, and the Dough Roller Money Podcast.