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**Tess Vigeland: **While we're on the subject of retirement, Marketplace Money listener Karl in Framingham, Massachusetts, tells us he recently went to a couple of online retirement calculators and got wildly different results:

Karl:I just went to Bankrate.com and tried their Save A Million calculator. My wife and I have substantial savings of about $207,000 and plan to save $600 per month. Bankrate says that our projected savings, assuming a conservative 7 percent return, would only amount to $1 million after 100 years. I then tried the CNNMoney Millionaire calculator, making the numbers match as closely as possible. They say we'll have a million after 21 years. So which calculator is correct?

Excellent question. Well, for some help, we turn to University of Maryland finance professor Russ Wermers.

**Vigeland: **Welcome to the show.

**Russ Wermers: **Well, thank you very much.

**Vigeland: **In general, are these online calculators helpful?

**Wermers: **I think they are, with certain caveats. They tend to be available and be easy to use.

**Vigeland: **Well, as we heard earlier, Karl in Framingham, Massachusetts, has tried to use a couple of these calculators and he got vastly different results. Is that what you're generally going to find?

**Wermers: **The answer to that is it depends. I believe the computations are probably correct on most of these Web sites, but they can come out quite differently simply with a few tweaked assumptions on the rate of return on stocks, rate of return on bonds. So, you want to have a calculator that allows you to control, or at least, to examine, as many of the assumptions behind the calculator as possible.

**Vigeland: **Let's go online together and I want to take you through a couple of calculators to see if we can help folks figure out what to do here. Let's try MSN -- moneycentral.msn.com. They've got a calculator there, so I'm going to go there as well. The first question, and you'll see this on most calculators, is "what is your age today?" and then it asks you what your age is going to be at retirement. I think most people will probably plug in 65. But then, the third question, and again, this is very similar in most calculators, is "what is your life expectancy?" How on Earth am I supposed to figure out when I'm going to die?

**Wermers: **Well, that's a big problem and most people, when they're plugging numbers into one of these financial calculators, are going to want to feel good about the output.

**Vigeland: **Right.

**Wermers: **They're not going to want to feel like they're way behind on savings, so they're likely to plug in a number for their life expectancy that's actually lower than what it might be. Some of that may come from the bias of looking backwards; we're going to live longer, probably, than our predecessors do.

**Vigeland: **So the advice would be to overestimate?

**Wermers: **The advice would be to overestimate or at least try several different scenarios and see how that affects the savings assumption.

**Vigeland: **Well, let's move down on the calculator. Your annual income today? That's fairly easy to figure out, but then there's a number: the average return on your investments before retirement. Again, this is basically asking you to predict what the stock market is going to do or even the bond market, if you have some funds in bonds.

**Wermers: **Yeah, and I think that's a particularly dangerous part of these calculators. Most people think that the stock market will probably return more than 12 or more than 15 percent per year over the next 20 or 30 years until they retire and that's very unrealistic. In general, I think you're best off lowballing the number a little bit or at least being realistic, that stocks will probably, adjusted for inflation, return something like 6 or 7 percent per year.

**Vigeland: **How do you figure out how much you're going to need in retirement?

**Wermers: **I think 80 percent is probably a good place to start, but some people will probably need 100 percent of their earned income. Let's face it, they're going to have a lot more time to spend money, so they probably will be spending the money. Now, in terms of the income changing over time, I think one way you can deal with that is to make a conservative assumption that you're income is going to rise at about the rate of inflation.

**Vigeland: **And would you say that would be, what, 3 percent?

**Wermers: **Right. The inflation over the long run, or at least the last 50, 75 years, I think, has averaged 3 percent.

**Vigeland: **I also flipping over, as we're talking to a calculator that I've done through Fidelity where I have some of my retirement funds. They say that they run more than 250 market simulations based on the calculations that I put in. Is that fairly standard and what does that mean?

**Wermers: **It's not very standard. I've looked at a few of these retirement calculators and they essentially run one scenario and that's it. I actually like Fidelity's calculator. They run with different assumptions for the market rate of return and inflation and they come up with, under different scenarios, here's the worst case, here's the best case, here are all the cases in between.

**Vigeland: **Are there one or two calculators out there that you think are really good that can really help people?

**Wermers: **In general, I tend to bias towards financial calculators on Web sites of financial institutions that really know the business, places like Fidelity or Morningstar. So, I'd say there are probably a lot of good financial calculators, retirement calculators out there. Just be sure that it comes from a reputable firm that you can trust to do the computations and the assumptions correctly.

**Vigeland: **Well Russ, thanks so much for going through these calculators with us.

**Wermers: **It's my pleasure.

**Vigeland: **Russ Wermers teaches finance at the Smith School of Business at the University of Maryland.