Dave Ramsey Retirement Calculator: How It Compares to Retirementize
by Grant Marsten - October 2024
When you're researching retirement calculators, you'll quickly discover that different tools are designed to answer different questions.
Some calculators are primarily designed to help you figure out how much you should save before retirement. Others are designed to help you understand how your savings, pensions, government benefits, taxes, housing and other income sources can work together once retirement begins.
The Dave Ramsey Retirement Calculator is one example of a retirement-planning tool focused largely on estimating how your investments could grow and helping you determine how much you may need for retirement. Retirementize takes a different approach, with an emphasis on retirement income planning and the years after you stop working.
Two Different Retirement Planning Questions
Before comparing the calculators, it helps to understand the two questions you're trying to answer.
1. How Much Do I Need to Save?
A retirement savings calculator generally starts with your current age, savings, contributions, expected investment growth and retirement goals. The objective is to estimate how large your investment portfolio could become and whether you're saving enough to reach your target.
This is an important question during your working years. If retirement is still 10, 20 or 30 years away, knowing whether you're contributing enough can be extremely useful.
2. How Do I Turn My Assets Into Retirement Income?
Once retirement gets closer, another set of questions becomes important:
- When should I start CPP, OAS or Social Security?
- How much should I withdraw from my investments each year?
- Which account should I withdraw from first?
- How will withdrawals affect my taxes?
- What happens if my spouse has different income?
- What happens if I sell or downsize my home?
- How will rental income affect my retirement?
- What happens if inflation or investment returns are different from my assumptions?
These are primarily retirement income planning questions. This is the area where Retirementize is designed to be particularly useful.
What Does the Dave Ramsey Retirement Calculator Do?
Ramsey's current retirement calculator is designed to give users an idea of how much their investments could be worth when they retire. Ramsey also offers a separate retirement assessment that estimates how large a retirement nest egg someone may need and how much they may need to invest each month.
This makes the Ramsey tools particularly relevant to people who are still in the accumulation phase of retirement planning.
Ramsey's broader retirement resources also discuss subjects such as retirement income, taxes and Social Security. The calculator itself, however, is presented primarily around investment growth and retirement savings rather than building a detailed year-by-year retirement income strategy.
Where Retirementize Takes a Different Approach
Retirementize is designed primarily around the retirement income phase. Instead of asking only how large your portfolio might become, it allows you to model how different income sources can work together throughout retirement.
Retirementize supports both Canadian and U.S. retirement planning and can model a range of retirement income sources and assets.
- Government benefits: CPP, OAS and Social Security.
- Pensions: Including defined-benefit pension income.
- Registered accounts: RRSP, RRIF, TFSA, 401(k), traditional IRA, Roth IRA and other supported accounts.
- Non-registered investments: Including taxable investment accounts and savings.
- Real estate: Model a primary home, downsizing, home sales and rental properties.
- Taxes: Retirement income can be modeled using country-specific tax calculations.
- Spousal planning: Model spouses and Canadian income splitting or U.S. joint filing where applicable.
- What-if scenarios: Test changes to inflation, investment returns, housing, income and other retirement events.
The key distinction is not that one tool is universally better than the other. They are designed around somewhat different planning needs.
Dave Ramsey Calculator vs. Retirementize
Here is a practical way to think about the differences between the two approaches.
| Feature | Dave Ramsey Tools | Retirementize |
|---|---|---|
| Primary emphasis | Retirement savings and investment growth | Retirement income and long-term retirement planning |
| Estimate future investment value | Yes | Yes |
| Retirement income planning | Covered in Ramsey's broader retirement resources | Core focus |
| Canada and U.S. | Primarily U.S.-oriented | Designed for Canada and the U.S. |
| CPP and OAS | Not the primary focus of the calculator | Yes |
| Social Security | Discussed in Ramsey's retirement resources | Yes |
| RRSP and TFSA planning | Not designed around Canadian accounts | Yes |
| 401(k), IRA and Roth IRA | Yes | Yes |
| Adjustable inflation assumptions | Depends on the specific Ramsey tool | Yes |
| Primary home planning | Not a primary focus of the retirement calculator | Yes |
| Rental property planning | Not a primary focus of the retirement calculator | Yes |
| Detailed retirement tax modeling | Covered in broader Ramsey resources | Core feature |
| What-if retirement scenarios | Depends on the specific tool | Yes |
| Free option | Yes | Yes |
Why Country Matters
One of the biggest practical differences for Canadian users is the retirement system itself.
A retirement plan for someone in Canada may involve CPP, OAS, GIS, RRSPs, RRIFs, TFSAs, Canadian tax brackets and provincial taxes. A U.S. retirement plan may instead involve Social Security, 401(k)s, traditional IRAs, Roth IRAs, Medicare and federal and state taxes.
These systems are different enough that a calculator designed around one country may not translate cleanly to the other.
Retirementize was built specifically to support both Canadian and U.S. scenarios, allowing the retirement model to account for the different income sources and tax systems.
Retirementize Is About More Than Your Investment Account
One of the biggest challenges in retirement planning is that your investment portfolio is only one part of the picture.
Imagine a Canadian couple entering retirement with:
- $700,000 in RRSP and RRIF assets
- $150,000 in TFSAs
- A defined-benefit pension
- CPP and OAS
- A $600,000 home
- A rental property generating monthly income
Their retirement plan isn't simply a question of whether the $700,000 investment account will grow.
They also need to consider when pensions begin, when CPP and OAS begin, which accounts are withdrawn first, how taxable income changes over time, whether the home is eventually sold, how rental income affects taxes, and how long the money needs to last.
That is the type of multi-variable retirement scenario Retirementize is designed to model.
Which Type of Calculator Should You Use?
The answer depends largely on where you are in the retirement-planning process.
If Retirement Is Still Many Years Away
A savings-focused calculator can help answer questions such as:
- How much should I save?
- How much could my investments grow?
- Am I on track for my retirement goal?
- How much might I need to invest each month?
If Retirement Is Approaching or Has Already Started
An income-focused retirement calculator can help answer different questions:
- How much income can I generate?
- When should I start government benefits?
- How should I coordinate pensions and investments?
- How much tax might I pay?
- How should I manage withdrawals over time?
- What happens if inflation is higher than expected?
- What happens if investment returns are lower than expected?
- What happens if I sell my home or a rental property?
This is where a retirement income calculator can become especially useful.
Don't Think of Retirement Planning as One Calculation
Retirement planning isn't really a single calculation. It's an ongoing process involving income, spending, taxes, investments, government benefits, housing, longevity and unexpected events.
A savings calculator can help you build toward retirement. An income calculator can help you understand what happens after you get there.
For many people, using both types of tools at different stages can provide a more complete picture.
Try Retirementize
Retirementize is designed to help Canadians and Americans model retirement income using multiple income sources and assets. You can adjust assumptions such as inflation and investment growth, model a spouse, include pensions and government benefits, and explore housing and rental-property scenarios.
You can also use what-if scenarios to see how changes in your assumptions affect your retirement plan.
Try the Retirementize retirement calculator and see how your retirement income could look under different scenarios.
Fun Facts
- Dave Ramsey's current retirement calculator is designed to estimate how much your investments could be worth when you retire.
- Ramsey also offers a separate retirement assessment that estimates how large a retirement nest egg you may need and how much you may need to invest each month.
- Retirementize was built to model both Canadian and U.S. retirement systems, which is particularly important when government benefits and tax rules are part of the plan.
- Your retirement portfolio is only one part of a retirement-income plan. Pensions, government benefits, housing and taxes can materially change the amount of income available to you.
Conclusion
The Dave Ramsey Retirement Calculator and Retirementize approach retirement planning from different angles.
Ramsey's calculator and retirement assessment can help people estimate their retirement savings needs and understand how their investments may grow. Those questions are particularly important during the accumulation years.
Retirementize focuses more heavily on what happens once retirement is approaching or underway: coordinating multiple income sources, modeling taxes, managing withdrawals, incorporating government benefits, and testing different retirement scenarios.
Neither approach needs to replace the other. The important thing is to use a planning tool that matches the question you're trying to answer.
If you're approaching retirement and want to see how your income, investments, pensions and other assets could work together, try the Retirementize retirement calculator.
