Online financial calculators enable workers and retirees to set more adequate savings goals for retirement than those who didn't use calculators, new research from the Employee Benefit Research Institute, Washington, shows.
“We asked people, 'How much do you think you will need to accumulate by the time you retire so you can live comfortably?'” said Nevin Adams, EBRI's director of education and external relations.
“We took the figures and compared them to our estimates of what they need in retirement” based on respondents' age, income, gender and family status, he said. “Higher goals produced a higher chance of achieving what they need.”
The EBRI guidelines for assessing adequate retirement income include basic expenses, plus some health insurance and out-of-pocket expenses as well as expenses for nursing home care and home health care, Mr. Adams said.
The EBRI research was part of its annual retirement confidence survey, but this was the first time EBRI asked about financial calculators, Mr. Adams said.
The online calculators had the strongest influence on retirement goal-setting by single men and single women in the lowest of four income categories measured by EBRI, as well as the second lowest income category.
The calculators' influence became progressively less in the higher income groups, according to the survey posted on EBRI's website.
Single men and single women “set lower targets” for their retirement needs, Mr. Adams said. “The calculators help them set a higher and more realistic target.”
Among families, there was no clear pattern among the four income groups on the impact of calculators in setting an adequate retirement goal, the EBRI report said. However, the goal-setting scores for families were higher than those for both single men and single women for each income group except the lowest, the report said.
