Rating Retirement Advice: A Critical Assessment of Retirement Planning Software

This paper develops a rating system for internet-based free retirement planning software that assumes unsophisticated users. The rating system takes into account two of the most important sources of retirement income—Social Security and investments—and the two main determinants of retirement income needs—the length of the planning period and the target replacement rate or target retirement income. We illustrate the rating approach with a sample of programs, and we find that these often tend to do a poor job in the way they handle Social Security benefits. Some encourage older persons to assume large benefit cuts, which we view as unlikely.