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Check Again

Jonathan Clements

THE TWO-MINUTE CHECKUP is, I like to think, a unique financial tool: It aims to offer feedback across someone’s entire financial life based on no more than nine pieces of information. That’s an ambitious goal and—perhaps no surprise—some users have found the calculator wanting.

Meet Checkup 2.0.

Sanjib Saha, who writes for HumbleDollar when he isn’t busy writing software, and I went through all the comments that the calculator had received and made a host of changes. Let me highlight three of them.

First, we tweaked the “financial fitness” feedback. The original feedback compared users’ total savings to their earned income to see whether they were on track to have a big enough portfolio, as of age 65, to generate retirement income equal to half their salary.

Some users didn’t take kindly to that feedback. Many folks noted that the Checkup didn’t take into account the pension they were entitled to, while others simply didn’t like being told they were behind when it came to retirement savings.

To make the results more palatable, Sanjib and I changed the way they’re presented. The idea remains the same: We’re looking at whether folks are on track to have enough retirement income as of age 65. But now, we simply tell folks what percentage of their current earned income they’ll likely have as of age 65, assuming they continue to accumulate retirement savings at the same rate they have in the past. Note that users only receive this feedback if they’re single and still in the workforce or, alternatively, if neither they nor their partner are retired.

The second key change: We’ve allowed retirees to input their guaranteed income, such as Social Security, annuity income and pension income. Some users felt the calculator’s feedback was incomplete if this number wasn’t included.

Third, we tweaked the Checkup’s suggestions for couples where one is retired and the other is still working. This was a flaw in the initial version of the Checkup. I’d assumed most couples were either both retired or both working, but—based on the comments we received—I was badly mistaken.

Even with the revisions, I can’t promise that the Two-Minute Checkup will offer the exact right financial answers for everybody. Each of our lives is too unique for a simple tool to offer that sort of precision.

Instead, I have a different ambition: I hope the Checkup will make users think harder about their finances.

Are you saving enough and spending reasonably? Do you have the right stock-bond mix? Do you have too much debt? Are you taking the right steps to prepare for your children’s college costs? Do you have the right amount of emergency money? Do you have all the insurance policies and estate-planning documents that you need?

If the Two-Minute Checkup gets you to ponder such questions, I’ll consider it a success. Got friends and family members who aren’t so diligent about their finances? Please forward the Checkup’s URL to them. The two minutes they spend could make a lifetime of difference.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles.

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