Plan Your Retirement.com

How (and When) to Use Retirement Software

Garbage in, garbage out is an old saying, but still true. So try to be as realistic as possible about your expected company pension, post-retirement expenses, and current savings. If, for example, you're saving money to put your kids through college, don't count it as retirement money too. And if your monthly budget is now $5000, don't tell your software you're going to get by on $2000 a month once you retire. You won't.

Talk It Out

Use the results from retirement-planning software as a springboard for discussion with your spouse, if you have one, and your flesh-and-blood investment adviser. If the results say you have way more than you need (and on the heels of this raging bull market, many people do), maybe it's time to lighten up on the savings, and have some fun.

If, on the other hand, they tell you that you'll have to save 50 percent of your salary for the next decade or you're doomed, you'll probably want to make some changes in lifestyle or attitude. Maybe you should explore more aggressive investments. Maybe you need to curtail spending. The results you'll get from these programs won't make those choices for you, but they will lay them out for you with digital clarity.

Revising Your Plan

How often should you go back to these programs and redo your retirement plan? As often as you want, if you enjoy it. More realistically, expect to perform a tune-up at least once every year on an updated version of the same program. Go back to the software more often, says Robert Wolfe of Compu-Val Investments in Wilmington, Delaware, if your situation changes in any major way.