Retirement Planning Tool vs Working with a Financial Planner

There’s an extensive list of options online for retirement planning calculators.  Oftentimes, we get asked about the difference between using a financial planner versus using a retirement planning calculator tool online. With planning tools online, you’re typically not running variable rates of performance for a portfolio. Usually, you enter in your fixed rate of return which can vary around 5% or 6%. Some individuals or DIY’ers will use higher rates, such as an 8%, or 12% rate of return. That’s rather ambitious, and it’s often better to play it safe on the lower side than to plan poorly counting on a bigger return. That’s where a financial advisor can help you set guidelines. 

A Firm’s Financial Planning Calculator

As a firm, we use financial planning calculators as well. However, ours are more robust. One of the more popular softwares out there is MoneyGuidePro. This software allows us to do a Monte Carlo simulation for our retirement timing projections. It runs a thousand different possibilities going forward, including taking to account another financial crisis similar to 2007 and 2008.

On the other hand, a lot of the big box firms and banks actually don’t have access to any of that. More often than not, they use very simple calculators, much like what you’d find online. Independent financial advisors over the last 10 years have really stepped up their game and invested in great software to help with retirement projections. If you work with a good financial planner, you can rest assured that helping you put together a comprehensive plan.

Other Aspects of Retirement Planning

A retirement calculator is only one part of retirement planning. A financial advisor will also look at how your estate is structured and what will happen upon your death. They should also make sure you have long-term care insurance to cover any unexpected health care expenses near end of life. Additionally, they evaluate insurance needs, and look at long-term or property casualty needs. All of these things come together to make up a comprehensive financial plan. This is what we do here at Wiser Wealth Management, in addition to working with another software that uses AI, which is relatively new and helps us do tax analysis.

In conclusion, while online calculators can be useful for small things, you shouldn’t base your future off of them. Working with a financial advisor, will not only give you the most accurate forecast possible for your retirement years, but it will also give you peace of mind allowing you to rest assured that there’s a whole team looking out for you.

Have more questions? Contact Us

Casey Smith
President, Wiser Wealth Management

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