The founder and CEO of NewRetirement, an online retirement planning service, explains how his service can help investors see how well prepared they are for retirement.

Interested in a second opinion on your retirement plan? Even if you have a good handle on your savings and investments, do you understand how they fit into a holistic retirement plan?

There are currently about 74 million baby boomers aged 50 to 70 in the U.S. A 2015 survey found that 57% of CPA financial planners highlighted running out of money as their clients’ top retirement concern, followed by uncertainty around retirement account drawdown strategies (14%) and health care spending (11%).

Many have good reason to be concerned: For households in the U.S. headed by people age 55 to 64, about 70% have less than $100,000 in retirement savings and only 9% have more than $500,000 in savings.

Source: “Retirement Security: Most Households
Approaching Retirement Have Low Savings,”
United States Government Accountability Office
May 2015 report.

 

The good news is that everyone has levers they can pull to improve their situation. Retirement is complex. How much do you need? How long will you live? What is going to happen to Social Security and health care costs? Beyond saving more and taking more risk, what else can people do? NewRetirement, a website I founded in 2005, tries to help people answer those questions.

Like many entrepreneurs, I started NewRetirement while trying to solve a problem I encountered in my own life. My mom was having some financial challenges; her advertising agency was struggling with a downturn in the economy and she essentially fell into retirement without any kind of plan. My brother and I started by looking at what kind of help she needed and for someone to help her.

We quickly realized that retirement planning involves a lot more than just savings and investments, but there were few resources—especially trustworthy and affordable resources—that were helping people navigate this really important life transition. (Some wealthy people are lucky enough to connect with well-informed financial advisers who act at as their fiduciary, but for many people this isn’t an option.)

We decided to start NewRetirement.com as a new way to approach retirement planning.

What’s Different?

NewRetirement’s retirement calculator is designed to work for anyone who is worried about their retirement, especially people who are in their 50s and 60s and nearing the end of their careers.

While savings and investments are an important aspect of the tool, what is most important to those approaching or living in retirement is figuring out the best way to make their money last as long as they do.

NewRetirement helps people figure out how to draw down their savings as well as think through things like Social Security, income, Medicare, work and phased retirement, as well as how to manage debt, expenses and out-of-pocket medical costs in order to live as securely as possible. It includes financial forecasting based on your inputs, some high-level tax modeling and required minimum distributions (RMDs). The tool also allows retirement goal-setting and “what-if” modeling on any aspect of your plan, such as various retirement dates, working part time, with or without an annuity, different Social Security claiming strategies, using home equity or not, etc.

It’s a do-it-yourself (DIY) solution: Users can build and manage their plan on their own time. From our perspective, NewRetirement helps you build a living plan, one that can change and evolve with your life, so if you get an inheritance you can adjust things, or if a family member gets sick you can adapt your plan.

The retirement calculator and planning tool is the core of the NewRetirement site. It is supported by relevant content & news and a community of users and experts who are contributing questions, expertise and new ideas.

The NewRetirement Calculator

There are three steps to get organized and on track with the NewRetirement calculator.

Step 1: Set Up Your Account

If you navigate to the NewRetirement calculator, you see this screen:

 

Once you sign up and register, we take you through a three-page account setup that asks for a high-level financial summary.

 

Step 2: Build Your Plan

After setting up your plan, you are presented with a summary dashboard. From here, you can review an initial analysis of your situation, which should give a high-level view of where you stand today and what your future scenarios may look like. You can also dive into the Your Plan section, where you can run a number of what-if scenarios around variables including when to retire, work, annuities, Social Security, incomes, expenses, pensions, savings, housing, medical, debts and estate planning. Users can see the impact to their plan across their cash flow, their net worth and what they need to retire.

 

There are several features built into the NewRetirement Calculator:

• A summary optimistic and pessimistic scenario for your plan
• A projection of what you might need to save to fund retirement
• A life expectancy estimate based on IRS longevity tables
• An annuity calculator for fixed immediate and deferred annuities
• A Social Security estimate based on different start ages
• A return calculator for different asset classes
• A cash flow forecast
• A net worth forecast
• A personalized risk assessment based on your financial situation and plan
• A comparison to your neighbors
• RMDs (required minimum distributions)
• The ability to do “what-if” modeling of major variables in your plan, such as retiring at different times, downsizing, changing your Social Security claiming strategy, changing income and expense forecasts and many others
• Automatic home equity calculations around refinancing and reverse mortgage options
• A set of potential improvements based on your situation
• A dynamic and personalized to-do list generated from your plan

Step 3: Monitor and Manage Your Plan

As part of building a plan, most users identify areas they need to work on, whether it’s cutting expenses, investing more efficiently, thinking through how to claim Social Security to get the highest benefit, where to retire, what kind of part-time work to do or any number of other topics. Through the To Do and Improvements sections, users can explore and learn more about how to strengthen their plan.

We are continually enhancing the engine and adding features to the tool. We see many users coming back over time to build and monitor their situation as their lives evolve and the world and markets change around them.

The NewRetirement Website

The NewRetirement site includes many resources to help users on their journey and enable them to learn from one another and experts. There are thousands of articles and blog posts covering financial topics around retirement, in addition to topics regarding lifestyle and health care. A core set of materials covers topics like investing, housing, health care, budgeting and estate planning. A question and answer area has thousands of questions from users and answers from experts, users and members of our team.

Other sections offer more detailed calculators and suitability tests spanning Social Security, Medicare, annuities, pensions, home equity conversion/reverse mortgage, mortgage, Medicare supplemental insurance, life settlements, long-term care and estate planning.

Additionally, we post a number of articles every month on an array of relevant topics into our blog and email a semi-monthly newsletter. The landscape of financial solutions, government programs and new innovations that impacts our audience is changing quickly and we strive to help people stay on top of what matters.

Conclusion

We’ve had over 10 million people use our site, most of whom are over age 50. The challenge of how to prepare for and manage retirement is very real for them. Users tend to fall into one of the two following categories.

• Planners: Those who are biased to prepare and have been saving and investing for most of their lives (the approximately 20% of baby-boomer households that have accumulated greater than $200,000 in savings); or
• Everyone else: Those who have done some level of preparation, even if it’s just checking out our site to see what’s possible.

NewRetirement is a “mission-driven” team: We believe that millions of people can improve their quality of life in retirement by getting more educated on the relevant topics and planning ahead. Since we launched the latest version of the website at the end of 2015, we’ve gotten a lot of great feedback on the tool. The helpful suggestions on features and functions that users want to see are guiding our product development team.

We welcome feedback on the NewRetirement site and our retirement calculator from Computerized Investing readers.