A few weeks ago, in an article titled How Well Are You Preparing for Later Life, I suggested that signing up for an account with MoneyGuidePro® would be a very helpful step in crafting a comprehensive retirement plan. SMI Premium members have access to this financial planning software for a one-time fee of $50. As long as you maintain your premium membership, you will continue to have access to MoneyGuidePro®.

In response to that article, a couple of readers mentioned that they’re using the free online planning resources available through Fidelity and wondered how MoneyGuidePro® compared. I have now put both approaches to the test and am back with the results.

How specific do you want to be?

The summary statement is that MoneyGuidePro® is far more detailed than Fidelity’s tools and it provides multiple solutions for filling in any projected shortfalls—something you’re left on your own to figure out with Fidelity.

Similar basics

Fidelity and MoneyGuidePro® both ask for the basic information you would expect, such as your birthdate, gender, income (Fidelity makes you choose among several preset ranges, whereas MoneyGuidePro® allows you to enter the exact information), expected retirement age, and “planning age” (a polite way of asking when you expect to die)—along with all the same information for your spouse if you are married. Both tools enable you to link directly to your investment accounts, saving you from having to enter the information manually.

But that’s where the similarities end.

Very different details

Fidelity asks you to choose from several preset answers to questions about your level of investment knowledge and your investment objective (growth, aggressive growth, etc.), which it uses to help compare your current portfolio allocation to an optimized allocation.

MoneyGuidePro® is much more detailed, asking about your later life expectations (active or quiet lifestyle, new home purchase, travel, self-employment, and more), concerns (running out of money, healthcare costs, parents needing care, and others), goals (desired monthly income, leave a bequest)—with specific amounts allocated to each goal and the ability to classify each one as a need, want, or wish.

MoneyGuidePro® also enables you to choose a specific “risk score,” which is used to create an appropriate asset allocation. From there, you can see how likely it is that you’ll be able to achieve your goals without running out of money. If your probability of success is low, the software will recommend various changes, which you can customize as well by changing the aggressiveness of your portfolio, modifying your goals, and more.

Worst case scenarios

Something else that’s unique to MoneyGuidePro® is its ability to model various worst-case scenarios. How would cuts to Social Security impact your plan? What about a spike in inflation? What if you were to die much earlier or later than the assumption you used in your plan?

When we publish the September issue of the Sound Mind Investing newsletter online tomorrow, the cover article will walk you through the worst-case scenario that’s on many investors minds right now: the possibility of another 2008-level bear market. Knowing how well your portfolio would hold up during such a downturn would help you see whether your current allocation is appropriate and give you added confidence in staying with your plan if and when such market conditions emerge.

Is it worth $50 to get down to this level of detail in your retirement planning? Maybe the better question is whether you can afford not to use MoneyGuidePro®.

If you’re a Basic member and would like to access MoneyGuidePro®, your first step is to upgrade to Premium. Right now we’re running one of the best upgrade offers we've made in years, and we're doing it specifically to try to entice Basic Members to try MoneyGuidePro® because we think it's such a valuable tool.

If you’re already a Premium member, this article will tell you how to sign up.