Uncle Sam's Top-Notch Retirement Calculator
by Glenn Ruffenach
Thursday, June 19, 2008
provided by wsj.com


An improved tool from Uncle Sam is one of the best resources available to help calculate your retirement finances.

Most people have the same first question about retirement: How big a nest egg will I need? Two years ago, the Employee Benefits Security Administration, part of the Department of Labor, published "Taking the Mystery Out of Retirement Planning." This smart, 62-page guide helps answer that question in a detailed, but easy-to-understand, manner.

And now it's even better.

The original booklet contained eight worksheets -- involving assets, income and expenses -- to help calculate Your Particular Number. Now, these worksheets have been moved online and you can let the Labor Department's computers do the math.

What's more, you can store and revise your data and calculations for as long as a year (by means of a simple username and password; the site doesn't ask for any information that might identify you).

What makes "Mystery" so valuable? Clarity, to start. The unidentified authors recognize that retirement planning can be intimidating and have taken pains to keep the text and graphics simple and engaging. At the same time, they have managed to pack a lot of information into a small space -- tackling issues like diversification within portfolios, Medicare and how to close gaps in your savings.

The booklet also gets the "little things" right -- which can have big consequences. For instance, many retirement planners account for inflation in their calculations. But "Mystery" assigns a separate -- and higher -- rate of inflation for health care (7% vs. 3.5%). That's a small, but critical, detail in a retirement that could last 30 years.

Of course, the guide isn't perfect. Jerry Sonnenschein, a retired pension actuary in Bloomfield, Mich., who has studied retirement calculators, notes that long-term-care expenses get short shrift. "Mystery" is also designed primarily for people about a decade from retirement (although the online worksheets, which address distributions from savings in retirement, can help recent retirees).

That said, the booklet "does a very nice job helping people get started" with retirement planning, Mr. Sonnenschein says. "You get good explanations and good guidance."

You can find "Mystery" and the worksheets at www.dol.gov/ebsa (click on "Publications/Reports"). You can print the booklet from the site, or order a copy at 866-444-3272. The cost? That's a nice feature, too. It's free.

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