Retirement Calculators

February 27, 2004 3:48 PM

Retirement calculator needed. [more inside]

It's easy to find calculators that tell you how much you need to save if if your want to retire at X age with X level of money per year. What I'm looking for is a bit more complex:

Say that I want to invest 10% of my gross salary per year in retirement. Let's also say that my employer matches the X% of the first 4% of my salary deferral. Given that I am fairly young and my tax bracket will increase, is there a calculator that could tell me whether it would be better to put all the money in the company 401K plan or if there was a break even point at which I should shift some of the yearly 10% into a similarly performing Roth IRA to take into account later life taxation? Is this bordering on the milieu of a financial planner?

posted by machaus to work & money (7 comments total)

As far as a calculator, I'm afraid I don't have any suggestions.

For a long term strategy as you seem to be interested in forming, I'd highly recommend a financial planner. Don't be afraid to get a second opinion as well.

Finally, with a little more data on how much you expect to make in the future and what tax brackets you anticipate being in, this sounds like a problem that could be solved with a few sheets of paper, an hour, and some algebra.
posted by yangwar at 7:17 PM on February 27, 2004

I know a simplistic modeling tool that, while it won't just let you plug in those numbers and get an answer, could help you figure out where you stand by playing with a few different scenarios.
posted by majick at 8:55 PM on February 27, 2004

not sure if it's everything you need, but you might try this.
posted by edlundart at 10:10 PM on February 27, 2004

No calculator, machaus, and I would posit that a calculator like you suggest would require too many assumptions (future tax rates, expected returns, future tax law changes) to really be useful. Furthermore your 401 and your Roth have vastly different features-- ERISA protection on the 401, and no MRD on the Roth, for example.

The common (and correct, IMHO) wisdom is to contribute to the 401(k) up until the match is maxed, then contribute to the Roth, and then, if you can still afford to save more, make unmatched 401 contributions.
posted by trharlan at 10:31 PM on February 27, 2004

So, how does one find a good independent financial planner? I would like some advice, but am very leery of taking it from someone with interests contrary to my own.
posted by jester69 at 6:17 AM on February 28, 2004

Machaus, there may be something for you at Hugh's financial calculators page. If not, maybe email him and ask him to whip one up - he seems to like crunching numbers.
posted by yoga at 9:29 AM on February 28, 2004

Ernst & Young used to sell a software/book kit called Prosper that did things like help you define goals (life and financial) and organize your investments to meet them. They weren't whistling Dixie, because they installed it on all their employees' computers, too. It doesn't seem to have itself prospered, however, and I can't find anything about an up-to-date version. It was quite slick for the Win9x era, though.

I would expect today most of its features are found, individually, in packages such as Quicken. But it did have a unique perspective that I liked.
posted by dhartung at 2:05 AM on February 29, 2004