Problems Retirement Planning Calculators Do Not Calculate

Retirement calculators are tools that make financial calculations, enabling the user to create approximates of how much money you will need to save up for retirement. Created by financial service firms and software companies as an option to ease the difficulties and confusions people do when they attempt to calculate their estimates themselves. Despite it being a great assistance to what is rather a complicated task, there are many problems that this tool actually has, and can cause serious consequences due to certain miscalculations by the calculator. There are actually many variables that need to be explained, but with these, the results are simplified to a single number that people end up ignorantly relying on. Indeed, here are a number of problems in the financial calculations that many retirement calculators have.

Social Security

A majority of calculators do not ask for the detailed information of your benefits, depending highly on your Social Security income on its minimum information like current earnings, age, and expected year of retirement. However, Social Security income can vary greatly in the future, but this as well as assumptions of inflation tends to be neglected by the calculators.


Several calculators would set a default investment rate-of-return, while there are some that will assume a certain percentage of return based on the retirement plan you choose. Unfortunately, a market’s rate-of-returns can vary widely in time. Neither does the calculator take into account that you might change your investing habits in the future that can change the numbers rather significantly.

Life expectancy

No calculator will ever be able to estimate the exact life expectancy of each individual. Hence, some calculators have default life expectancy numbers which usually neglect important demographics like race, gender, and income; while others will ask you to predict your own life expectancy based on your own family history and health, which can be inaccurate without taking into account the demographics, family history, and health.

Surviving spouse

Most free calculators do not calculate the retirement income for a surviving spouse. It is an important variable to calculate the couple together and separately with different life expectancy, so that the one living longer than the other does not run out of cash to survive. Most free calculators tend to neglect this as a one scenario of a non-existent surviving spouse.

Housing info

Retirement calculators have very few assumptions of what you may possibly do with your house. There are many real scenarios one can
actually do, such as continue staying in them, sell and downsize, or even liquidating. However, most calculators neglect these possibilities.

Inflation forecasts

Although there are some that includes a certain potential percentage of inflation, many retirement calculators do not include inflation as a variable, otherwise give a default percentage because it is too difficult to predict.

Read more details about related topics investment planning and choosing the right investments.

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