Click Here to Calculate That Magic Income Figure

You might think that stock option windfall will solve all your problems, but managing newly acquired wealth brings its own challenges, and MyCriticalCapital is a Web site designed to help you.

Its mission is to help you achieve financial freedom by determining your critical capital, defined as "the amount of capital you need to pay all the critical expenses you will incur for the rest of your life."

This site's aim is purportedly to help people make good decisions about when to exercise stock options. However, its retirement planning tools will be useful to anyone. Even its help screens are worth printing and saving, as they contain a wealth of good, solid planning information.

Rather than offering conventional tax minimizing stock option strategies, MyCriticalCapital suggests you first calculate the amount of wealth you need to retire. You can then see how stock options fit into an overall plan to achieve that wealth. That amount is called Critical Capital. It all seems a very sensible approach.

Registration is free, but you cannot save any of your data on the Web site. If you want to save your data, you must pay $5.95 monthly ($59.95 in advance for one year) for a subscription. That's comparable to the $49 annual fee being charged during a promotion by competitor AdviceAmerica.com. (See "Site Plans Your Financial Future.")

Hands-On Money-Handling

MyCriticalCapital.com is fairly easy to use. First, you create a profile with your age, annual expenses, the age you want to retire, current values of your portfolio and retirement plans, and your inflation forecast. You're also asked to estimate your portfolio's annual rate of return. MyCriticalCapital.com limits that rate to between 5 percent and 12 percent--to keep you from making wildly optimistic rate of return estimates (common when thinking about retirement).

Naturally, you can also submit stock option dates, with a variety of grant dates, exercise prices, and numbers of shares. The Web site calculates how much wealth you will need to retire. Then it uses your other assumptions to calculate the age at which you will be able to retire. This information will help you structure your retirement planning.

While MyCriticalCapital does a good job of worrying about company risk, it doesn't do so well with other risks. Consider uncertainty over your lifetime. What assumptions does MyCriticalCapital make about the number of years you will be drawing from your savings? We did a little number crunching. MyCriticalCapital appears to assume an 82-year life span, but the site gives no information on this subject. An e-mail inquiry produced the response that you were assumed to live "forever."

Also, MyCriticalCapital handles defined contribution retirement plans only. There is no way to factor in future payments from defined benefit plans.

Help Improves With Fee

Customer service is spotty. E-mail inquiries were answered only after we paid for a subscription to the service and received a welcome message from a live human being.

A second query about defined benefit plans, this time as a subscriber, was answered. MyCriticalCapital advised discounting the future stream of payments from the defined benefit plan, and including the present value in our portfolio value. While this made sense, undoubtedly a number of customers would have trouble implementing this advice. Even if you do understand their advice, it's not particularly easy to use because of the uncertainty about how long you will live (and, therefore, how many years of payments to include).

MyCriticalCapital is a welcome addition to the online toolkit of financial planning. Its online help is very good. But if you need personal advice, you're still better off consulting a financial planner of the human variety.