How we test: Inside the Money Lab

The CR Money Lab doesn't have the long tradition of other CR labs. It was started in 2007 with the aim of testing financial products and strategies with the same rigor brought to testing other types of products such as cars, appliances, TVs, and other goods. The Money Lab appears in each issue of the Consumer Reports Money Adviser and is also featured in personal finance articles in Consumer Reports.

Unlike most of the laboratories here at Consumer Reports, the Money Lab isn't much to look at. It doesn't have rows of gleaming new washing machines churning away on identical loads of laundry, or rotating drums that simulate feet pounding on exercise treadmills. No one wears a lab coat or protective eyewear. Instead, the Money Lab consists of a couple of desks, a pair of high-powered computers, 80 years of economic and financial data, and customized software to analyze it.

But like the more photogenic labs down the hall, our Money Lab serves a purpose that has long separated our organization's work from that of many others. As much as possible, we base our reports on our own research, rather than simply reporting the conclusions of others. We often call on outside experts, of course, but we make every effort to put their assumptions to the test before passing them along as worthy of our readers' consideration or action.

At the Money Adviser, for example, we think the question of whether you can safely withdraw percent of your retirement assets each year might be just as important to answer as whether your next vacuum cleaner, automobile, or digital camera will be reliable. And with the Money Lab, we have a powerful tool to subject that and other widely held financial assumptions to serious scrutiny.

Since its beginning, the Money Lab has evaluated financial products, including mutual funds in different categories, online banks and brokers, 529 college savings plans, target-date retirement funds, and immediate annuities. It has tackled thorny financial questions, such as the best way to pay down debt and when to start collecting Social Security—at 62, when you're first eligible, or wait until 70, when you reach your maximum monthly benefit.

The Lab has addressed fundamental questions such as how often to rebalance a portfolio, how many funds should you own, and whether dollar-cost averaging beats lump-sum investing. During the financial crisis, the Money Lab provided some historical perspective on bear markets and recoveries, and offered some guidance on determining your tolerance for risk.

Some of the most popular features produced in the Money Lab tell consumers how to shake loose the savings hiding in everyday spending. Now that's something you can take to the bank.