Last year's stock market free fall has left a lot of folks wondering whether they'll ever be able to retire. But assuming you don't want to work until you drop, is it possible to get back on track?

The average 401(k) plan balance fell 27% in 2008, according to Fidelity Investments. If you're in your 20s, you've got plenty of time to recover. If you're in your 50s, though, you may be wondering whether it's time to develop a taste for Fancy Feast.

But is it really all that grim? We tested several online retirement calculators to find out what a fictional 50-year-old couple saving 10% of their salaries (see box) would need to do to get back on track. We also asked Financial Engines, which provides investment advice to 401(k) plan participants, to analyze their situation.

While a retirement calculator can't replace an experienced financial planner, it can provide a general idea of where you stand and what you need to do.

"The positives still overwhelm the negatives," says Sheryl Garrett, a financial planner in Kansas City, Mo. Calculators may not provide perfect projections, she says, but they help people spend more time looking at their long-term goals and making adjustments along the way.

Here's what we found, and the pros and cons of the calculators we tested:

Principal Financial Group

http://tiny.cc/A7E1p

Principal Financial designed a calculator to help 401(k) plan participants figure out how long it will take them to recover from last year's losses.


In our test drive, it would take the husband and the wife about five years to rebuild their 401(k)s, assuming an average investment return of 4%. That's not a bad result for a couple still more than a decade from retirement.

But keep in mind that all this calculator does is tell you how long it will take you to recover from your 2008 losses. It doesn't tell you whether that will be enough to live on when you retire. The calculator doesn't ask you how much of your pre-retirement income you want to replace, how long you expect to live, or whether you'll have other sources of income in retirement.

The calculator does suggest how much you need to increase contributions to speed the rebuilding process, but that's about all the guidance you get. And that's pretty much the point: Principal says the calculator "is a starting point for a discussion with a financial professional/adviser about your plans for retirement."

AARP

http://tiny.cc/2glM5

This is a much more comprehensive calculator that takes into account a number of factors, including inflation, the amount you expect to receive from Social Security, life expectancy and whether you want to leave an inheritance. Fat chance.

In our test, the fictional couple came up far short of their goal of retiring at age 62 and 63 with 70% of their pre-retirement income. Specifically, the calculator said the couple would have a shortfall of about $280,000 unless they upped their savings to $2,935 a month, or 25% of their income. (This was based on a life expectancy of 90 for each spouse; a longer expectancy would widen the gap.)

Once you stop sobbing, AARP offers suggestions on how to reach your goal without giving up, well, groceries. You can adjust your retirement date, increase the amount you save each month, lower your post-retirement income, or add income from a part-time job. Sadly, increasing our fictional couple's retirement age to 65 still left them about $146,000 short. However, if they postpone retirement until age 65 and boost their savings to 16% of their income, they can reach their goal, according to the calculator.

Choose to Save

http://tiny.cc/gOPs2

This is a stripped-down calculator: It doesn't have a setting for couples and doesn't offer suggestions for closing the gap. And that's unfortunate, because in our test, the gap was huge: Both spouses were on track to replace just 40% of pre-retirement income.

You can go back and change some of your assumptions, but the calculator doesn't offer any suggestions on how to do that. On the plus side, it does allow you to include part-time income.

Financial Engines

No free online calculator

Financial Engines calculated that, in order to replace 70% of their pre-retirement income, the couple would need to save 24% of their salaries, a hefty sum. But postponing retirement could make a big difference, according to this analysis. By waiting one year, Financial Engines estimates, the couple could reduce the amount they need to save to 18% of income. Waiting until 65 would reduce the amount they need to save to 13%.

Many couples can get back on track by postponing retirement by two or three years, says Wei-Yin Hu, director of investment analysis and research for Financial Engines. But not everyone will have that option: You could lose your job before you reach your new target date, he says. Increasing your savings will help offset the risk that you'll be forced to retire earlier than planned, he says.

While online calculators offer a good starting point, users should understand the risks, says Lydia Sheckels, a financial planner for Philadelphia-based Wescott Financial Advisory Group. "Calculators can distort results based on probabilities, giving a false sense of confidence or panic," Sheckels says.

For example, there's a big difference between a 4% and a 5% inflation assumption, she says. "Many of these tools are used by people who don't appreciate the significance of the input -- then you get a lot of garbage in and garbage out," she says.


It's also dangerous to use a calculator once and assume your financial future will stay the same, Garrett says. Revisit it every year, she says. Even better, she suggests, try two or three of these calculators and then take the more conservative one.

T. Rowe Price

http://tiny.cc/2jwCU

This was the most sophisticated of the calculators tested. As befitting a mutual fund company, it takes into account portfolio mix, then projects your investment returns, instead of asking you to come up with your own estimate. This calculator allows you to include information for both spouses but generates results on an individual basis. Once again, though, our couple face a severe shortfall: nearly $3,000 a month.

This calculator allows you to compare the benefits of saving more vs. postponing retirement, and in our test, this much was abundantly clear: The most effective way to make your money last is to work longer.

One drawback: The calculator doesn't let you include part-time income in retirement, an increasingly likely necessity for many retirees.

Finding

Five years to recovery

Finding

$280,000 shortfall

Finding

60% shy of happiness

Finding

Work a bit longer

Finding

$3,000 a month short