The Globe and Mail offers a number of free retirement and investing calculators including their pay yourself first calculator. (As of 2016 Nov. 2, I noticed that this calculator is finally no longer on the Globe and Mail web site. Another copy of the calculator is available here.) I tried poking around with it but couldn’t get it to spit out numbers that matched my own calculations. I’m convinced now that it is broken.
This calculator takes in 5 numbers:
– Annual salary
– Salary increases
– Pay yourself percentage each year
– Number of years of saving
– Rate of return
Then the calculator spits out
– Total earnings
– Retirement fund
To narrow down the problem, I tried simple scenarios with 0% salary increases, a 0% rate of return, and a $100,000 income. I set the saving rate to 12% ($1000 per month). Sticking in just 1 year of saving, I get the expected result:
– $100,000 in total earnings
– $12,000 retirement fund
But when I go to 2 years of saving, I get
– $200,000 in total earnings
– $23,000 retirement fund
Exactly 1 month of savings is missing. Going to 3 years of saving, the retirement fund goes to $34,000. Now 2 months of savings are missing. This pattern continues. After 20 years, 19 months of savings are missing.
This seems like a pretty simple mistake that should have been caught. I haven’t investigated whether this calculator makes any other types of mistakes. I sure hope there haven’t been too many people relying on this calculator.