Is there an app, for that?

By Mark Bertrang, The Creator of the Financialoscopy® on Thursday, November 5th 2020


Money questions. Is the answer in the app store?

I receive a copy of the journal of Financial Service Professionals each month.  It’s a pretty intense publication which covers accounting and taxation, estate planning, financial gerontology, insurance and risk management, social security planning and regulatory and ethical concerns for best practices for firms and their clients.  It’s not like picking up Money Magazine from your local grocery store check-out isle.  The reading is not light; its heavy duty.

A recent twenty-page article discussed the limitations of retirement planning software.  The four PHD authors considered a total of sixty-two publicly available retirement planning software and calculators for the its study, including some names that you might recognize, such as Vanguard, T. Rowe Price, Fidelity and Merrill.

As I scoured the many tables and charts, I discovered how inconsistent each software program could be when compared to the others regarding inputs, assumptions, recommendations and outcomes.  

Its conclusions stated that the retirement advice could vary even with the same scenarios.  The authors also found most existing programs failed to address risks, such as longevity risk – how long you might live, investment risk, inflation risk and health risk, all of which retirees should consider when planning for their retirement.

At the close of the article, the journal said that software, online calculators and apps were exciting new tools, but because of the results from the present study, due to the large variations in inputs, outputs and the financial literacy necessary to understand and interpret the outputs, most consumers will need the assistance of a professional to understand, apply and be held accountable for executing any advice produced by an online retirement planning calculator.

Retirement planning should require a painstaking-through approach.  Make sure that you are not relying on solely on apps and online software programs to uncover all of your what-ifs.  What if it’s missing an important piece?

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