Now that Microsoft (Stock Quote: MSFT) has announced a phase-out of Microsoft Money, its financial software, Quicken (Stock Quote: INTU) is left as the premier program for keeping finances organized on your computer.

Of course, there are also a slew of online programs.

Whichever you choose, be sure to use it with care, especially when it comes to long-term planning.

All do a perfectly adequate job with the math, but all depend on the user for key inputs like expected investment return and inflation rate, and no one knows what the real numbers will be.

The BankingMyWay.com Retirement Planner, for instance, can tell whether your investing strategy will build the nest egg you need. The default inputs displayed when you call up the calculator show that a 45-year old with $100,000 in investments will run out of money at 73, while hoping to live until 100.

You can adjust any of the inputs to make the money last longer. Increase the investment return to 10 percent, before and after retirement, and the money will last to age 80.

Then push the retirement age back to 70, from 65, and, presto, the money lasts to 102. Crisis solved.
The problem is: What are the right numbers to put it?

You may indeed be able to postpone retirement to a date of your choosing, and you can opt for a more modest lifestyle in retirement. But inflation is beyond your control. While you can try to boost investment returns, raising the number usually means taking more risk.

For long-term planning, most experts assume inflation will continue at its typical level around 3 percent. But moving it just one point up or down can make a big difference over long periods. Changing the number in the retirement planner from the 3.1 percent default to 4 percent makes the subject’s money run out at 95 instead of 102.

Also note that the Consumer Price Index figure used for inflation may not reflect your own cost of living. Health care costs, for example, generally rise faster than the overall inflation rate, and older people need more health care.

Most financial programs assume investment returns will average 7 or 8 percent a year. That’s based on long-term averages for a portfolio that contains a mix of stocks and bonds. But most investors have done much worse than this over the past decade, thanks to the dot-com and subprime mortgage crises.

What’s the solution?

First, to play with a lot of inputs. Have a worst-case scenario involving, say, 4 percent inflation and 6 percent investment returns. Then see how much more you need to save, or cut from your cost of living in retirement, to make your money last long enough.

Second, run the numbers through a Monte Carlo simulator. These are calculators that do hundreds, sometimes thousands, of computations, to figure the odds you’ll meet your goal.

Each run uses a different combination of inflation and return figures, typically based on patterns the market has seen in the past. If 700 out of 1,000 runs meet your goal, you have a 70 percent chance of success. Mutual-fund firm T. Rowe Price (Stock Quote: TROW) has a Monte Carlo simulator on its site.

Note that even this approach must rely on uncertain assumptions. The T. Rowe Price calculator, assumes, for example, that in retirement you can live on 70 percent of what you live on now. That could be the case if you have children who will be grown and a mortgage that will be paid off. But maybe not.

In the end, preparing for retirement is a gamble. One thing is certain, though: The more you save now, the better off you’ll be.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.