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.