Are you retired or close to retiring? Are you concerned about stretching your dollars through your retirement years? Do you wonder how much you can afford to take out of your retirement assets without running out of money some day?
Fidelity Investments, a mutual fund company, offers a very interesting tool for people who are asking these types of questions. Fidelity is not the only company that has tools to help retirees, so check other mutual fund Web sites and compare the results.
If you are not a Fidelity account holder, you can still access this information by calling 1-800-343-3548. An account representative will ask for the same information that is required online and will enter it into the Retirement Income Planner for you.
If you have a Fidelity account, access the Retirement Income Planner on the Web at www.fidelity.com. You’ll have to click on a number of topics to get to the retirement planning tools and eventually the Retirement Income Planner. Before going online, you will need to gather certain types of information to fill in the questionnaire, including:
– your estimate of both essential and discretionary expenses in retirement;
– the total of your tax advantaged assets such as individual retirement accounts (IRAs) and employer-sponsored retirement accounts such as 401(k) plans;
– the total of your taxable assets;
– your spouse’s and your own estimated monthly social security payments; and
– all other monthly pension income.
The Planner will calculate and provide some interesting information. It will estimate whether you are adequately protected, somewhat at risk or at significant risk of running out of money based on longevity, estimated spending level, health care costs, market risk and the impact of inflation.
One of the most useful aspects of the Planner is the ease of asking "what if" questions. What if you decide to change your expenses? What if you decide to work during your retirement years? What if the market performs better or worse than the projections used by Fidelity? You can get information about withdrawal strategies and can consider estate tax consequences of your assets.
By clicking on "Action Plan" you can print a 17-page plan that summarizes the information that you entered plus the analysis provided by Fidelity.
Tools of this type are important to help you make decisions throughout your life. By thinking ahead you can avoid ugly surprises.
Judy McKenna, Ph.D., CFP, Family Economics Specialist, Colorado State University Cooperative Extension, firstname.lastname@example.org