Research from LIMRA Secure Retirement Institute suggests that "Do-It-Yourself" retirement planning may not garner the best results. The study found that 44 percent of pre-retirees and retirees do not engage a financial professional when preparing a financial retirement plan. Of those 50 percent say they can do it "just as well (or better) on their own."
But can they?
The Institute found when it came to determining their income in retirement and how long their assets would last, nearly 80 percent used an online tool or manually calculated using a pen and paper. One in four "do-it-yourselfers" simply guessed (chart).
The popularity of online tools is growing but they often lack the sophistication of planning tools used by financial professionals. A recent study of 12 online retirement calculators by Corporate Insight found monthly income projections by these calculators varied 60 percent.1 An earlier study by Texas Tech University and Utah Valley University determined the results from many of these tools "extremely misleading."
Relying solely on these tools can leave people at financial risk during retirement. There are many factors, including health care, long-term care, market volatility and interest rates that can have a significant impact on a household's retirement income.
