Wednesday, February 13, 2013

Broken Retirement Calculator

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.) 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.


  1. Tithing or income tax? Some seriously bad quality control.

  2. Around 2000 I was testing my mortgage calculator and found one of the big 5 banks using American calculations for their website mortgage calculator (i.e. compounded monthly instead of semi-annually).

    I sent them an email telling them specifically where the calculator was wrong. They responded with the helpful suggestion that I could go into a branch if I needed an amortization schedule. So yeah, banks don't always get their calculators right.

  3. @Gene: Before I saw the patter and created the examples that made it clear, I came up with several ideas including taxes, inflation, reduced return due to a shift to fixed income, and a few other things. But it seems to be a mistake rather than anything deliberate.

    @Glenn: I find it funny that large companies can't get this right. I created a version of this calculator in Excel in 5 minutes.

  4. Gives you great faith! I'll be interested to see if anyone from the Globe ever posts an explanation here for why it's doing that. I suspect it's inflation.

    1. @Bet Crooks: I'm convinced that the problem is a simple error. The Globe did thank me for pointing out the problem. I'm hoping the let me know when it's fixed.

    2. Well it's encouraging they at least are trying to fix it!

  5. If you realize mistakes early, it mean you are heading towards solution. All good now!

    1. @Retirement Options: I'm not sure what you think is good now. The calculator is still broken.