Online Retirement Calculators Can Be Risky

Despite the preponderance of online Monte Carlo-based retirement calculators, there are plenty of critics who agree with Hothersall that the simulations leave important information out of their equations. David Nawrocki, a finance professor at Villanova University in Pennsylvania, in 2001 published his case against Monte Carlo simulations in the Journal of Financial Planning, noting that the simulations, at worst, "can lead to incorrect decisions" by investors. He argues that Monte Carlo simulations are useful in situations where data is hard, or impossible, to get. "This is not the case in the investment decisions typically faced by financial planners," he writes. "Financial market data is plentiful and cheap."

So barring Monte Carlo simulations, where can the typical investor turn to get a good handle on retirement planning? Hothersall says there are alternatives for the do-it-yourselfer, including software such as Financial Fate. And according to Nawrocki, there are plenty of analytical models that can be used to give investors get a more realistic picture of their retirement plans. But unless you're a math whiz, your best bet may be to leave the number crunching to the experts and get in touch with a trustworthy financial planner.