If managing your 401(k) or setting up an IRA have long been on your to-do list, but you don’t where to start — or you may simply not have had the time — we’re here to help
Let’s say you don’t know how much you need for retirement, you want to assess how your retirement funds are doing or your employer doesn’t offer a retirement plan. We found tools to help with all those issues— Plynty, Blooom, and Honest Dollar— and gave our honest, no-holds-barred review of each.
Take your pick of the bunch, then enjoy having the management of your retirement funds, quite literally, at your fingertips.
Is This You?
You Have No Idea How Much You Need for Retirement
Relatively new to the fintech app scene, Plynty helps you form a realistic retirement savings plan based on your current lifestyle.
First prompting you with background information such as your annual income, and whether you are planning retirement for one or two people, the app then takes into account any expected retirement income. It calculates your expected retirement expenses based on those numbers.
The app first gets users to understand their basic living expenses, then how those expenses will translate into retirement.
Plynty assumes that they way you live in retirement will be the same way you live right now — that way you won’t have to change your lifestyle when it’s time to retire — which is a good thing for those of us who like to enjoy the finer things in life.
The personalized plan that illustrates what a user’s retirement expenses will realistically look like is complemented by an easy checklist of factors that play into it — like expected Social Security benefits, pensions, retirement annuities, even an estimated travel budget. Cross country road trip in an RV, anyone?
What we like:
The app’s interface is clean and uncluttered. Plus, the interactive pie chart that shows your retirement expenses in relation to your retirement income is a great way to take stock of where you really stand.
What we don’t like:
For a beginner, this app can be a bit confusing because there are multiple steps to complete. Plynty does simplify this a bit with the easily-accessible checklist.
While this app is a good choice for those a bit more advanced in terms of personal finance and retirement planning, it may be a bit overwhelming for a beginner.
You Want to Assess How Your Retirement Funds Are Doing
Did you know that a professionally-managed 401(k) can grow twice as much as one that isn’t?
The web-based financial planning tool analyzes your 401(k) using its proprietary algorithm to adjust your stock allocations. Don’t worry, it’s also looked over by a human, licensed advisor.
The tool promises to adjust your account within 30 days of signing up, and every 90 days after.
You don’t even have to move your 401(k), just link it to Blooom. The tool will then analyze the investments in your 401(k), alerting you to things like high fees, if you have the right amount of stocks and bonds or if you’re too aggressive or too conservative.
After showing you what’s potentially wrong with your 401(k), Blooom then offers advice on how to fix it by showing you a mix of investments that may work better for you, as well as options that can reduce how much you’re paying in fees. Blooom says it reduces their clients’ fees by an average of 37 percent.
The best part? Blooom continues to manage your account for you and updates how your 401(k) is invested as the market changes.
Blooom charges $10 per month for a single account and $7.50 for each additional account.
So you may be asking yourself, why is it important to adjust my 401(k)? I thought I just set up my contributions, watched my employer match that amount, and watched that baby grow. Nope.
When contributing to a 401(k), it’s important that you don’t just have the money sitting there in cash. You have to actually invest it. (And a money market fund is not an investment — it’s basically cash.)
Plus, you have to make sure the asset allocation (what percent of your portfolio is allocated to what kinds of investments) matches up with how far away retirement is for you. Blooom helps you do this.
Also, the tool says it can help you grow your 401(k) in five minutes. That’s less than you’d spend walking to grab a cup of coffee. Why not?
There’s no smartphone app, which for those of us not consistently sitting behind a desk, is a bit of a drawback. Personally, I like to have everything I need on my iPhone — that way I know I can access it anytime, anywhere.
One of the knocks on the tool is that Blooom doesn’t take into account your personal tolerance for risk – only your age and how far away retirement is for you. Also some take issue with the fees, which were raised last year.
I dig it. First of all, being aware that you actually have to invest your 401(k) funds — along with the right asset allocation and regular rebalancing — is key to hitting your retirement goals.
But how many of us know how to do this, let alone actually do it? Blooom makes it easy, and frankly, makes it actually happen. I’d like to think that their fees pay for themselves in the difference between my never-going-to-do-it approach to rebalancing and their every-90-days approach.
I also like how Blooom shows the growth of your account with a flower icon — Blooom, bloom, flower, growth, get it? I love a good pun.
Your Employer Doesn’t Offer a Retirement Plan
Say you work for a small business or startup or you’re a freelancer — chances are, an employer-sponsored retirement account has never been an option for you. Plus, the thought of setting up your own IRA is intimidating.
You’re not alone. More than one-third of American’s don’t have access to employer-sponsored retirement plans.
Try approaching your employer about offering a service like Honest Dollar.
The app serves as a platform for small business and startups that want to offer retirement accounts to their employees. While you can get just a regular IRA or Roth IRA with Honest Dollar, it also offers options for plans that allow your employer to make a contribution. Remember, whenever possible, take your employer up on an option like this. It’s free money.
The app claims it takes just 90 seconds for employees to set up — users can scan their driver’s license (convenient!) or manually input their information, link their bank account, select their weekly contribution, and, yep, begin saving for retirement. It’s that easy.
Users can see handy pie charts that show the way their money is invested — say, 20 percent bonds, 80 percent stocks — and even see their total goal for retirement.
Honest Dollar is waiving is fees through the end of 2018. Beginning in 2019, the fee will be $1 per month for balances of $5,000 or less and 0.25% per year of assets for balances above $5,000.*
Honest Dollar was acquired by Goldman Sachs in 2016, which makes them stand out in a sea of financial technology apps. The app is easy to use, fast to set up, and most importantly, bridges a huge gap between those who have access to retirement accounts and those who just haven’t had the option.
You can’t roll over your existing IRA or 401(k) to Honest Dollar, so this app is really made for those who have yet to start saving for retirement, unless you want to have a lot of different retirement accounts. Personally, I like to have all my accounts in one place.
Also, employers can’t integrate Honest Dollar contributions with payroll. Contributions made via Honest Dollar are deducted directly from users’ bank accounts.
A good option for those who haven’t yet started saving for retirement, or who haven’t had access to employer-sponsored plans.