Retirement

Congratulations on your retirement! Now, have you considered how you'll handle your finances? The shift from a steady paycheck to drawing income from investments, social security, and perhaps other sources requires a different approach to cash management.

This article was inspired by an email from a reader named Irving who asked the following question: “I’m a 65-year-old retiree, could you recommend a good bank account setup?”

That’s an excellent question, so let's dig in.

Cash Management Challenges in Retirement

During your working years, cash management is simple. You get paid, deposit the check, and spend the money.

In retirement, things aren't so simple. Retirees generate income from multiple sources. There are guaranteed sources of income, such as Social Security, pensions, and annuities. Retirees also draw from retirement accounts, such as 401(k) and IRA accounts. Then there are taxable investment accounts and bank accounts to consider. For couples, the number of retirement accounts can double, and that's not counting the Health Savings Accounts (HSA) that many have.

If you are 70 1/2 72 73 or older, there’s also the matter of managing required minimum distributions (RMDs) from retirement accounts.

To help you navigate these complexities, we'll cover three topics. First, we'll look at the bank account setup I recommend. Then we'll discuss how to automate cash flow from investment accounts. Finally, I'll suggest some tools you can use to help manage all of these accounts.

My Bank Account Setup

The bank account setup is similar to what many have during their working years. But there are some important considerations that may affect where you open these accounts. We'll look at checking accounts, savings accounts and credit cards.

1. Checking Account

Traditional Checking Account

The checking account is the heart and soul of our banking setup. It's where we'll receive direct deposit of Social Security, any part-time income, and possibly pension or annuity payments. It's also where we'll receive transfers from our investment and retirement accounts, including any RMDs.

There are several important features I've found that are critical for a checking account. The account needs to provide check-writing capabilities, online bill pay, mobile check deposit, an excellent mobile and online experience, and a debit card. (The debit card may be needed to withdraw cash from an ATM, but for regular purchases, it’s not as secure as a credit card.)

Many retirees keep the same checking account they've used for years. If that works for you, then stick with it. It's an excellent option, particularly if your bank has branches near you.

Cash Management Account

Another option is keeping most of your money with a brokerage firm that offers a cash management account. It will give you the ability to keep your cash reserves where you invest, which can simplify transfers between accounts. Just as important, some cash management accounts also come with debit cards, mobile check deposit, online bill pay, and other features commonly associated with traditional checking accounts.

My favorite cash management account is the one offered by Fidelity. I personally think it’s the best of its kind in the industry. The account checks several boxes, including check writing, no fees or balance minimums, online bill pay, ATM debit card, ATM fees reimbursed globally, digital wallet compatibility, and FDIC insurance protection.

The account also pays a decent rate of interest on your savings. However, there are higher interest rate options available elsewhere. And since Fidelity is a broker, you can always park excess funds in Treasury bills that are currently paying a higher rate of return (see below).

Fidelity isn’t the only broker offering a good cash management account. Charles Schwab offers many of the same features as Fidelity. Merrill Edge is another option, with its own CMA account, complete with a Visa debit card, Bill Pay, and other features.

One exception is Vanguard. Though they offer some of the best funds in the industry, their CMA option is limited. That doesn’t mean abandoning your Vanguard account, but only that it isn’t suitable for cash management purposes.

2. Cash Reserve Account

We also need a secure account to hold our emergency fund and perhaps some of the money we plan to spend over the next year. A good cash reserve account has three important qualities:

• The account earns a decent amount of interest.
• Funds held in the account are safe.
• The account provides ready access to our funds.

There are several reasonable options, and we'll look at each:

• Savings account
• Money market account
• Money market fund
• Short-term certificates of deposit
• T-Bills
• Cash Management Accounts

Savings and Money Market Accounts

Bank savings products have the advantage of FDIC insurance, which makes them completely safe up to the amount of the insurance. To get the best rates, however, we need to look beyond large banks with branches. Most offer miserly rates.

For example, according to the FDIC, the current average interest returns on bank savings products are as follows (as of 9/21/2023):

• Savings accounts, 0.45%
• Money market accounts, 0.65%
• One-year certificate of deposit, 1.75%

Those rates are common with local banks, and well below what you can get elsewhere. For that reason, you’ll want to hold your cash reserve accounts someplace other than your regular bank. The solution is likely to be an online bank. Because they lack branch networks and the multitude of employees to staff them, online banks typically offer higher interest than traditional banks.

I maintain a list of the best rates on savings accounts, money market accounts, no-penalty CDs, and one-year CDs.

Money Market Funds

Money market funds and money market accounts are a lot like lightning and lightning bugs. They may sound similar, but they ain't. Money market funds are offered by brokers and are NOT FDIC insured. They are still reasonable options, in my opinion, because they invest in very safe short-term government and corporate debt.

An example of a money market fund, and one I hold myself, is the Vanguard Federal Money Market Fund (VMFXX).

Another is the Fidelity Money Market Fund (SPRXX). Just be aware that, like some other liquid investments, money market funds can take several days to liquidate your position and have the funds transferred into your spending account. You’ll need to plan accordingly.

Certificates of Deposit

A no-penalty CD can also be a reasonable option for an emergency fund. As the name suggests, you can pull your money out at any time (after seven or in some cases 30 days) without penalty. The rates on no-penalty CDs are competitive, and bank CDs are FDIC-insured.

U.S. Treasury Bills

Another option for cash reserves is U.S. Treasury bills. Those are short-term government bonds (under one year) that pay interest and are guaranteed by the US government. One benefit of T-bills is that they are free from state and local income tax.

You’ll want to hold treasury bills in a brokerage account. But be aware that if you sell the securities, there will be a delay of several days as the transaction settles before the cash is available in your brokerage account.

3. Credit Cards

Though it’s important to avoid debt in retirement, especially the credit card variety, credit cards do occupy an important place in retirement cash management. They are, after all, the method most commonly used for spending by many people. But the caveat is that you should pay off your balance in full each and every month to avoid the steep interest rates they charge.

It can also be a real advantage with rewards credit cards. I get a little bit fancy when it comes to credit cards, letting the rewards we earn on the cards accumulate. I save and invest those rewards, which have grown to about $30,000. You can check out my favorite cash back credit cards here.

Generating a Retirement Paycheck

Once you have your cash accounts set up, the next step is to automate your flow of cash as much as possible. Here are the three steps I use:

1. For taxable investment accounts, I have the dividends and interest automatically transferred to my spending account. Dividends and interest are taxable income anyway, so I use them as a first source of spending money.
2. For those who have reached the age of RMDs, you can have your broker automatically deposit the RMD into your spending account. Most brokers I'm familiar with will do this monthly, quarterly, or annually, based on your preferences. Again, since RMDs are taxable income, it makes sense to tap them to cover expenses.
3. Finally, if additional spending money is needed, you can sell investments from your retirement and/or taxable accounts. This part of the process is manual, and you'll need to consider taxes when deciding which accounts to draw from.

Tools to Help You Better Manage Your Cash

There are a lot of accounts and income sources to juggle. Fortunately, there are tools you can use to help you manage the whole process. Here are three of my favorites that I use.

Empower Personal Dashboard

Empower Personal Dashboard is my favorite financial management tool. It’s an online financial aggregator, where you can link and track your investment accounts, retirement accounts, bank accounts, real estate values, and even loans and credit cards, all in one place.

The Dashboard is free to use and provides various tools to help you better manage your finances. They even offer a fee analyzer to show you what you are paying in fees on various funds you hold in your retirement and investment accounts.

Now as I said, Empower is free to use, but they will reach out to you with a free evaluation of your portfolio. That’s because Empower has a premium wealth management service they will market to you with a free portfolio evaluation. You certainly can talk to them if you like, but you’re not required to do so in order to use the Financial Dashboard.

New Retirement

New Retirement is a robust retirement planning tool. You can think of it as a tool to create a roadmap for your finances in retirement. It doesn't track your investments, analyze your fees, and evaluate your asset allocation like Empower does (which is why I use both tools). However, it does analyze your spending and income in retirement to determine if your plan is sound.

With New Retirement, you can factor in everything from Social Security to Medicare to Roth conversions. It offers tools to help you determine when to start taking Social Security and whether a Roth Conversion makes sense. You can run “what-if” scenarios on everything from working an extra two years to moving to a lower income tax state.

Tiller Money

Tiller Money is a budgeting tool that also aggregates your financial accounts in one place. It differs from other budgeting apps in that it downloads your data into Microsoft Excel or Google Sheets. The information contained on the spreadsheet will automatically be updated each day.

Though I use Personal Capital to track our investments and New Retirement to plan our retirement, I use Tiller Money to track our budget. It’s a good choice if you’re a spreadsheet person. I like the fact that I control our data.

Conclusion

Cash management will get more complicated in retirement. The right combination of bank accounts, automation, and tools can make the job a lot easier.

Retirement calculators can help us plan and prepare to retire. When we are years away, these online tools can help us determine how much we should be saving. As we approach our time to retire, they can help us understand how much we can spend each year in retirement without going broke.

Not all retirement tools, however, reach the same result. They take different approaches to what is a complex series of calculations and assumptions. One study examined five popular retirement planning software packages and found stark differences in outcomes. As a result, it recommended that individuals use “multiple programs before implementing an action plan based on the results.”

To that end, here is a list of the best retirement calculators. Note that I have used each of these tools for years, as well as many others that didn't make the list.

Editor’s Top Picks

Of all the retirement planners available today, two stand out among the rest:

1. Empower–Previously called Personal Capital, it’s both free and comes with a robust set of features. Its retirement planner enables you to model everything from social security to pensions to one-time income (e.g., inheritance) and expenses (e.g., home renovation) during retirement. You can create multiple scenarios and run Monte Carlo simulations to see your chance of financial success (i.e., not running out of money).
2. New Retirement–This tool allows you to model virtually every aspect of retirement. It projects future income, expenses, and net worth. You can set income and expenses on a monthly, yearly, or one-off basis. It can model social security, pensions, and even Roth IRA conversions. There is an annual fee, although New Retirement does offer a free trial.

Best Retirement Calculators

What follows are my top 6 picks. Note that the first two are also retirement planners, meaning they have far more robust features than a simple calculator. The final three options are retirement calculators only. The inputs are much more limited, but these tools give you a quick estimate of when you can retire.

1. Empower

Best free retirement calculator

Empower is my favorite investing and retirement tool. In addition to being totally free, it's extremely easy to use and rich in features. Once a user connects their 401k, IRA, and other investment accounts, Empower pulls all the data from the accounts into its Retirement Planner.

The Retirement Planner then allows users to model both income events (e.g., savings, sale of real estate, social security, pensions) and spending goals (e.g., retirement spending, travel, education). Users can also set up multiple scenarios to compare, such as retiring at different ages. Empower then runs the data through a Monte Carlo simulation and reports the likelihood of the plan's success.

Unique Feature: Users can create multiple scenarios (e.g., different retirement dates, different social security strategies) and compare how successful each will be.

2. New Retirement

Most detailed retirement analysis

New Retirement is not for the faint of heart. The tool, which has both a free and paid version, enables users to model just about every aspect of retirement. For example, users can model social security claiming strategies, medicare coverage, annuities and pensions.

New Retirement handles the complexity of retirement planning in two ways. First, users can follow a quick start guide, answer a few simple questions, and have a complete snapshot of their retirement readiness in under five minutes.

Following that, users can dive into the details of everything from future healthcare costs to retirement savings contributions. New Retirement enables users to link investment and retirement accounts or enter them manually.

New Retirement offers three plans ranging in cost from free to $396 a year.

Unique Feature: New Retirement includes a Roth IRA conversion calculator to help users determine when and how much of a traditional IRA should be converted to a Roth IRA.

3. Vanguard's Retirement Nest Egg Calculator

Vanguard's retirement calculator seeks to answer one question–how long will your retirement nest egg last? It requires just four pieces of information:

• Length of retirement (e.g., 30 years)
• Current savings balance
• How much of the balance you'll spend each year
• Your stock/bond/cash allocation

With these four data points, Vanguard runs 100,000 simulations and provides the chance of success. Here's an example:

The calculator is very easy to use and provides useful information to assess one's retirement readiness.

4. NetWorthify

NetWorthify is designed for those wanting to retire early, although it works with traditional retirements, too. Simply enter your income, annual savings, and total savings, and NetWorthify estimates how long until you can retire. It's free to use.

5. cFIREsim

Another free option that I like a lot is cFIREsim. You enter some basic information such as when you plan to retire, current savings, income, asset allocation of your investments, and social security values. cFIREsim then calculates the likelihood of your success.

6. Fidelity's Retirement Score Calculator

Fidelity's Retirement Score Calculator estimates the percentage of your expenses in retirement that can be covered by your retirement savings. The calculator requires just a few pieces of information, including your age, salary, savings balance, and investment style. With this data, the calculator generates a retirement score:

Note that the calculator factors in an estimate of social security benefits.

Other Retirement Calculators Worth Considering

The following retirement tools didn't make our list but still may be worth checking out. In some cases, I'm continuing to evaluate them, and some make the “best of” list in the future.

• FireCalc
• T. Rowe Price
• MaxiFi Planner
• Ultimate Retirement Calculator
• ESPlanner
• AARP
• Fidelity Full View
• Betterment Retirement Savings Calculator
• Charles Schwab Retirement Calculator
• Dave Ramsey's Retire Inspired Quotient Tool
• Stash Retirement Calculator
• The Complete Retirement Planner

Retirement Calculators Not Worth Considering

Here are retirement tools that I believe aren't worth our time. I list them here to keep a record of what I've looked at and so that readers know I've considered and rejected these options.

• Flexible Retirement Planner–Too many ads on the site and the planner must either be downloaded (Windows only) or used with Java Web Start.

FAQs

In 2017, the Stanford Center on Longevity analyzed 292 retirement withdrawal strategies. The study used eight metrics to measure how each strategy would satisfy various retirement income goals. From this analysis, the study identified what it described as the Spend Safely in Retirement Strategy (SSiRS).

As described in a paper titled How to “Pensionize” Any IRA or 401(k) Plan, the SSiRS is a simple retirement spending strategy based on Social Security and taking RMDs from retirement accounts. The author, Steve Vernon, describes the strategy as follows::

Our analyses identified a straightforward strategy that produces a reasonable tradeoff among various goals for middle-income retirees. This strategy delays Social Security until age 70 for the primary wage-earner and uses the IRS required minimum distribution (RMD) to calculate income from savings.

The same author, along with Wade D Pfau and Joe Tomlinson, published a lengthy supplement to the paper in 2019: Viability of the Spend Safely in Retirement Strategy. The supplement provides additional analysis of the strategy and practical tips on how to implement it.

In this article I'll walk through how the SSiRS works, some modifications you may consider based on your specific circumstances, and what I think are the pros and cons of this strategy.

How the Spend Safely in Retirement Strategy Works

Social Security

The first step is to wait until age 70 to claim Social Security if you are single or the primary wage earning for married couples. Delaying Social Security results in significantly higher payouts. Each year one delays claiming Social Security past their Full Retirement Age (66-67 depending on your year of birth) results in an 8% increase.

As for the spouse who is not the primary wage earning, the study notes that the optimal claiming strategy will depend on the couple's specific circumstances:

For married couples, the optimal strategy for claiming Social Security for the spouse who isn’t the primary wage earner typically depends on individual circumstances. Often the optimal strategy for this spouse calls for starting benefits somewhere between the full retirement age (currently age 66) and age 70. For our analyses, we assumed the spouse who isn’t the primary wage earner would start Social Security at age 66.

Social Security Software

The 2019 supplement recommended “that older workers and retirees develop an optimal claiming strategy by working with a qualified retirement adviser or using commonly available software.”

For software, the authors recommended Open Social Security or Financial Engines. Open Social Security is a free and excellent SS calculator, which I reviewed in this video. Financial Engines, unfortunately, has since been purchased by a wealth management firm and is no longer available.

One alternative that I use is New Retirement. This retirement planning software covers all aspects of retirement, from your investments to Medicare to Social Security. It includes a tool that will help you determine your optimal Social Security claiming strategy.

How to Delay Social Security Until Age 70

For many, delaying Social Security until age 70 may be difficult. The authors make a few suggestions.

First, one can choose to work until age 70. They describe 70 as the “new 65.”

Second, one can create what they call a Retirement Transition Bucket. From the 2017 paper:

In the years leading up to retirement, an older worker might want to use a portion of their retirement savings to build a “retirement transition bucket” that enables them to delay Social Security benefits. While there’s some judgment involved with the necessary size of this bucket, a starting point would be an estimate of the amount of Social Security benefits the retiree would forgo during the delay period. The retirement transition bucket can also provide a buffer if the older worker is uncertain about the timing of retirement, and it could protect the worker against stock market crashes in the period leading up to retirement.

Finally, the authors note that claiming Social Security a bit early, say at age 67, 68, or 69, is a viable option with acceptable results.

RMDs

The second piece of the puzzle is the Required Minimum Distribution (RMD). The retiree simply takes their RMD from their retirement accounts each year. Major brokers will calculate this number for you and transfer the money to a linked checking account. As such, the combination of receiving SS checks and RMD payments make this strategy extremely easy to implement.

Here, we need to address several potential RMD issues.

RMDs for Early Retirees

First, what about those who retire before RMDs begin? Here, it's very easy to use the RMD tables to determine what your RMD would be at younger ages.

To do this, we need to understand how the RMD table works. For most retirees, RMDs are calculated using Table lll (Uniform Lifetime) from IRS Publication 590-B (2022), Distributions from Individual Retirement Arrangements (IRAs). This table shows the joint life expectancy of the IRA owner and a spouse who is 10 years younger. For example, an IRA owner aged 72 with a spouse who is 62 has a joint life expectancy of 27.4, according to the table.

For such an individual, their RMD would be the balance of their traditional retirement accounts as of December 31 of the previous year divided by 27.4. As you'll note from the table, however, there are no RMD factors for those younger than 72.

We can create such a table by using Table ll from the same IRS publication. Table II applies to those retirement account owners who have a spouse who is a 100% beneficiary of the retirement account and who are more than 10 years younger than the account owner.

To use this table, we simply look up the age of the account owner and a hypothetical spouse who is exactly 10 years younger. To help, here are the results for those aged 60 to 71 (I've added a column for withdrawal rate, which is 100/Distribution Period):

You'll note that for account owners younger than 66, the RMD factor results in a withdrawal percentage below 3%. I suspect that setting a floor of 3% is not an unreasonable approach if an early retiree were to follow the SSiRS.

Perhaps the more difficult challenge for early retirees is living off investments for a decade or more before claiming Social Security. As such, the Spend Safely in Retirement Strategy may not be ideal for those contemplating extreme early retirement.

RMDs on Roth and Taxable Accounts

The second potential issue is that many retirees have retirement savings in accounts not subject to the RMD requirements. Roth retirement accounts and taxable brokerage accounts are two that come to mind. Here, one can still use the RMD formula to calculate annual spending.

Stock/Bond Allocation for Retirement Accounts

The third issue is how one should invest their retirement savings using the SSiRS. The authors of the study conclude that a 100% stock portfolio produces the best results. While such a volatile portfolio is rarely recommended for retirees, the authors felt that the stability offered by Social Security justified the risky portfolio:

Our analyses support investing the RMD portion significantly in stocks – up
to 100% – if the retiree can tolerate the volatility. The resulting volatility in
the total retirement income portfolio is dampened considerably by the high proportion of income produced by Social Security, which doesn’t drop if the stock market drops.

Here it's worth noting that 70% of retirees describe Social Security as a “major” source of income, according to a 2022 study by EBRI. That being said, the authors also found that a 50% to 60% stock allocation performed well:

However, our analyses project reasonable results with a typical target date fund for retirees (often a 50% stock allocation) or balanced fund (often a 60% stock allocation), and these funds are commonly available in IRA and 401(k) platforms. These lower stock allocations would reduce expected income but would also produce lower downside volatility, compared to a 100% stock allocation.

Even with the stability of Social Security, I suspect many retirees would find the volatility of a 100% stock portfolio hard to stomach.

Refining the SSiRS

The authors noted several potential modifications a retiree could make to the SSiRS based on their specific circumstances.

1. Emergency Fund: It's recommended that retirees maintain an emergency fund that would not be used to generate retirement income. This fund could be used for unforeseen expenses, such as house or car repairs.
2. Spend More: Some retirees might want to spend more money in their early years of retirement while they're active and healthy. In this case, they could dedicate a portion of their retirement savings to a special bucket for these purposes; this bucket would also not be used to generate retirement income.
3. More Guaranteed Income: If retirees desire more guaranteed income than produced by the SSiRS, they could use a portion of their savings to purchase a low-cost Single Premium Immediate Annuity (SPIA). The authors also suggest the use of a Guaranteed Lifetime Withdrawal Benefit (GLWB) or Fixed Index Annuity (FIA). I'm not a fan of either due to their cost and complexity.
4. Tap Home Equity: If a worker is unable or unwilling to work longer to postpone drawing Social Security benefits, one possible financial strategy would be to use a reverse mortgage line of credit as a pool of funds to help cover living expenses while delaying Social Security benefits. Here the retiree should thoroughly investigate the pros and cons of a reverse mortgage before going down this route.

Pros and Cons of the SSiRS

Pros

The SSiRS offers several advantages:

• According to the authors, “It produces more average total retirement income expected throughout retirement compared to most solutions we analyzed.” Note that it performed better than constant dollar strategies such as the 4% Rule.
• It automatically adjusts the RMD based on the performance of the stock and bond markets. While this introduces volatility in the withdrawals, I think it reflects how retirees actually spend their money. In years when the markets are down, retirees tend to spend less.
• It provides a lifetime income, no matter how long the participant lives, and it automatically adjusts the RMD withdrawal each year for the remaining life expectancy. In contrast, the 4% Rule assumes a 30-year retirement. While this may be a reasonable assumption for some, any such constant dollar withdrawal strategy requires an assumption on the length of life. The SSiRS does not.
• “It projects total income that increases moderately in real terms, while many other solutions aren’t projected to keep up with inflation. The Spend Safely in Retirement Strategy produced projected real increases in income of up to 10% over the retirement period.”
• Finally, the Spend Safely in Retirement Strategy is easy to implement. As the authors note, it “can be readily implemented from virtually any IRA or 401(k) plan without purchasing an annuity. Many administrators can calculate the RMD and automatically pay it according to the frequency elected by the retiree.”

Cons

There are a few potential downsides:

• It may not be ideal for early retirees. While we can calculate the RMD for any age, retiring long before the start of Social Security may be impractical for many. In addition, RMDs at ages younger than 60 result in very low withdrawal rates that would put early retirement out of reach for most.
• In bad markets with high inflation, a retiree's after-inflation income could go down. Of course, the inflation-adjusted Social Security payments help to stabilize spending. But the RMD withdrawals, which are not subject to inflation adjustment, do expose a retiree to some level of inflation risk.
• Finally, the SSiRS could result in a retiree underspending, particularly in early retirement. This issue is not unique to SSiRS. The 4% Rule more often than not results in retirees who have more money after 30 years than they started with. As noted above, one response to this issue is to designate an amount of money to be spent in say the first decade of retirement and set it apart from the funds to which the RMD calculation will be applied.

Resources

• SSiRS Paper: How-to-pensionize-any-IRA-401k-final.pdf
• SSiRS Update Paper: Viability%20SSiRS%20Final%20SCL.pdf

Rolling over a 401k to an IRA is a hassle. I know from personal experience. Capitalize, a venture capital backed technology company, looks to take the hassle out of 401k rollovers.

The company offers a free service that handles all of the paperwork to safely transfer a 401k to an IRA. It never has access to your money and can help you choose an IRA if you want. In this review of Capitalize, I'll look at the details of how the service works and how they manage to offer it for free.

Capitalize QuickTake

Get Started

• Free 401k rollover service
• 4.9/5.0 Trustpilot Rating
• Works with most IRA providers
• Capitalize never has custody of your money

About Capitalize

Co-founders Gaurav Sharma and Chris Phillips launched Capitalize in 2020. The mission of the company is simple–to make the 401k rollover process easy. It raised $12.5 million in capital earlier this year. It has 17 employees and a TrustPilot customer rating of 4.9 out of 5.0.

Capitalize Review

How Capitalize Works

Capitalize follows a simple 3-step process.

Step 1: Locating your 401k

While this may seem odd to some, many people have long forgotten about an old 401k account. Or perhaps they don't know how to access it. In step 1, Capitalize will help you locate your 401k if you need the help.

I searched for an old company that no longer exists (they went bankrupt). Capitalize found the company's 401k plan, to my surprise.

Step 2: Choose an IRA

Here you can use an existing IRA if you have one. Otherwise, Capitalize can help you choose a new IRA. To help you pick an IRA, the tool walks through a number of questions:

1. Whether you want to manage your investments or have them managed for you
2. What factors are most important to you, including low fees, long standing brand, easy to use, and access to a human advisor.
3. How much money you have in your 401k (some IRA accounts have minimum deposit requirements).

Based on answer these questions, Capitalize suggests a number of IRA providers. For me, the top choices were Betterment, Wealthfront, Fidelity and Vanguard, among others.

At this step in the process, you create a Capitalize account with an email and password. Once created, you can click a link to open an IRA account at your chosen firm

Step 3: Submit 401k Info

Finally, you submit information about your existing 401k. This allows Capitalize to initiate the 401k rollover process. I found this process to be extremely quick and easy as I walked through it as part of this review.

What 401k Accounts Does Capitalize Worth With?

Capitalize works with all major 401k providers, as one would expect. This includes Fidelity, Empower, Vanguard and T.Rowe Price. For those with smaller providers, Capitalize allows you to search for your retirement account by your former employer's name.

How does it do this? Workplace retirement accounts like a 401k must be registered with the federal government. In fact, you can search what are called Form 5500 returns yourself here at the Department of Labor's website. The search feature is a bit hard to navigate. Fortunately, Capitalize makes it much easier.

If your 401k provider is not listed, just search for your company. Capitalize will then track down the 401k plan for you.

In addition, Capitalize works with both traditional and Roth 401k accounts, as well as 403b accounts.

What IRA Accounts Does Capitalize Work With?

If you need to open an IRA, Capitalize offers a variety of options. These include traditional brokers (Fidelity, Vanguard, Merrill, ETrade, TD Ameritrade), robo-advisors (SoFi, Betterment, Wealthfront), and some newer brokers (Ally, TradeStation).

You can also use your existing rollover IRA account if you have one.

How Long does a 401k Rollover Take with Capitalize?

It depends. It can take from a few days to a few weeks. The time varies because the processes that must be followed vary from one 401k provider to another.

How is Capitalize Free?

Capitalize makes money if a customer opens a new IRA account through its platform. This raises an important question. Does Capitalize's revenue model influence the IRA accounts that it recommends? According to Capitalize, the answer is no:

If you choose to open up an IRA with one of the providers on our platform then we may be compensated. This helps us keep the service free for users, but none of those providers is ever allowed to impact the content on our site. It also never affects the fees you pay as a customer. If you’ve ever used a site like Nerdwallet, Credit Karma or Lending Tree then you’ll be familiar with this model. Our reputation depends on you feeling like we provide an honest, independent product. 

I can add to their list of sites that earn money through partners RobBerger.com. My site makes money from some of the tools and services discussed on this site, including Capitalize.

My approach to this is simple. I'll only recommend a product or service that (1) I use or (2) would feel comfortable recommending to my mom or my children. However, you should always be aware of a company's financial incentives and undertake your own due diligence to make the best decision for you and your situation.

Capitalize Alternatives

At the moment, the only alternative to Capitalize that I'm aware of is to do it yourself. If you take that route, one tip is to contact your IRA provider first. They can often help you through the process, although you'll have to do all of the legwork.

Final Thoughts

I've rolled over 401k accounts a number of times. Fortunately, I've never encountered significant issues, but it is a hassle. The last rollover a few months ago required a lot of paperwork, faxing and scanning. It would have been much easier if I had help.

I'll be rolling over another 401k in December. I'll definitely be using Capitalize. Why not take the free help?