Tags: Calculators | omit | emergency | savings

Retirement Planner Hebeler: Calculators Don't Tell the Whole Story

By    |   Sunday, 06 Jul 2014 05:52 PM

Online brokerages and personal finance web sites vigorously tout their retirement calculators that are supposed to tell you how much you can spend, based on investment returns, inflation and sometimes taxes.

But there is an important element these calculators leave out, says Henry Hebeler, a retirement planner and former Boeing executive. That's the savings needed for emergencies and future large purchases, he writes on MarketWatch.

"Because online calculators leave them out, they implicitly assume that these will be funded with debt paid monthly from the annual income," Hebeler says.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

But putting themselves in debt is the last thing retirees should do, he maintains. "Debts are disastrous." Retirees should be earning interest not paying it, Hebeler says.

"Using credit and savings reserved for normal annual retirement spending can only reduce the quality of life for retirees who have no wages to compensate," he writes.

"To continue retirement without a severe restriction in lifestyle, retirees need reserves. These can be either a separate pot of money or simply a stated fraction of their total savings."

Meanwhile, Ron Carson, CEO of Carson Wealth Management Group, has three tips for those who started saving late for retirement or have suffered a financial setback that trimmed their retirement savings.

"1. Increase income and savings.

2. Manage spending.

3. Increase investment return," he writes on CNBC.com.

As for income and savings, "in order to continue an income stream to contribute to retirement savings, some adults may need to work longer in life," Carson says.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

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Many online retirement-needs calculators have a serious flaw, says Henry Hebeler, a retirement planner and former Boeing executive: They omit the savings needed for emergencies and future large purchases.
Calculators, omit, emergency, savings
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2014-52-06
Sunday, 06 Jul 2014 05:52 PM
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