Comments on: “How Much Do You Need For Retirement?” – Dumb question?

By: Joseph Griffin

Joseph Griffin — Mon, 18 Aug 2008 17:27:41 +0000

Only need five mil to retire no more.

By: Dave

Dave — Fri, 27 Jun 2008 16:21:13 +0000

Knowing just how much you need to retire is a complicated matter. What makes things worse is the fact that much of the help people used to be able to rely on, Social Security and pensions, may not be all that helpful in the future. As a result, most of the pressure to save for retirement lies with your own personal savings. Workplace savings programs are a great way to help reach whatever goals you set, but half of Americans don't have access to such plans. AARP supports automatic IRA programs at work, a plan backed by Congressman Neal of Massachussetts. You can see what the Congressman has to say about automatic IRAs on AARP's blog ShAARP Session.

By: partgypsy

partgypsy — Tue, 24 Jun 2008 18:21:28 +0000

I’ve tweaked with some of those calculators and like Miguel found out small changes in saving, market returns, and future inflation can make it that I have saved comfortably or will run out of money. Let alone trying to figure out future tax laws, economic conditions, etc.
So, I keep going back to the fact that I will over time try to up the percentage of income I devote to retirement. That will hopefully do two things: one, have more money available for retirement, and two, learn how to live on less. I’m at 10% plus 5% matching and would love to get it to 15% long term.

By: Miguel

Miguel — Tue, 24 Jun 2008 15:38:35 +0000

Would have to agree that this is one of the most perplexing questions, and also the one least able to predict. I’ve created some fairly complex spreadsheet models to play with (yeh I’m a fin’l gearhead at heart), and the one shocking I’ve discovered is how small variations in assumptions lead to huge differences in outcomes. I am I really only a percentage point in inflation away from either being totally destitute vs being flush with millions in retirement? And what accounts for all the happily retired people I know who do not have millions in the bank – Does dog food figure into their future diet? I don’t think that’s necessarily so.

As someone who likes to have a plan for everything, and who tends towards overkill in the PF dept, this is disconcerting to say the least. But, I’ve kinda learned to go with the flow. As long as I’m putting a substantial amount of my income towards saving and investment, then I’m figuring things will be just fine – though standard of living may need adjustment.

To add some complexity to it all, I actually do not so much want to fully retire, as much as simply have more personal life flexibility, as well as the ability to take on more career risk (i.e. transitioning to either having own business, writing/consulting for a living, or executive mgnt in non-profit sector, or all three). I want to continue being economically productive well into my 70′s if I can. I just want the OPTION to quit anytime I want and do whatever I want.

By: Bozo

Bozo — Tue, 24 Jun 2008 03:20:53 +0000

Without seeming to be flip, you’ll never know how much you’ll “need” in retirement, so it’s always best to save as much as you can from an early age.

Fifteen percent of your gross is a good start, every year, without fail. If you can stretch that to 20% or 25%, well, good for you, but that might be unrealistic. Be sure to set aside enough to receive any employer match you might have. It’s the best return you can get.

When investing that 401K, be sure to choose low-cost index funds (Vanguard or Fidelity) if that option is available in your 401K. Over a long period of time, fees can really reduce your gains.

Finally, as you approach retirement, don’t be shy about cashing out a bit and switching to high-yield laddered CDs. It’s not glamorous, but anything over 5% for half your portfolio at age 60 or so will help you sleep better.

Yours,

Bozo

By: Meg

Meg — Mon, 23 Jun 2008 13:25:41 +0000

I think it’s just much more realistic to strive to save a percentage of income for retirement rather than strive to save a certain dollar amount. The older you are and the less you have set aside, the higher percentage of your income you’re going to need to put away.

There’s just no use agonizing about what “the number” is supposed to be if all you can put away no matter what is 15% of your income (or whatever) no matter what. When it comes down to it, all we can do is save what we can.

When you get older you just take a look at what you have and what (if any) other income you can count on. If you don’t have enough to live on, you’ll have to a) downgrade your lifestyle post-retirement or b) keep working. That simple.

By: Heidi

Heidi — Mon, 23 Jun 2008 03:07:20 +0000

This is right on the money.

The difficult part is making the most of what you have saved once you hit retirement. I work in a financial services firm and we’re having a difficult time settling on one perfect retirement income solution for everyone (plan sponsors are begging for ‘one size fits all’ products) because of all of the variables you mention in your piece.

By: Don

Don — Mon, 23 Jun 2008 02:57:57 +0000

I still stand by my April comment on this question:

http://allfinancialmatters.com/2008/04/21/looking-at-retirement-income-needs/#comment-291944

By: Mo

Mo — Sun, 22 Jun 2008 17:05:00 +0000

This is a poser. What we’ve done is to put 20% of our income in secure investments of all stripes. That should take care of us. Best to all of you.

By: Ed

Ed — Sun, 22 Jun 2008 02:55:00 +0000

I feel that healthcare will be the biggest problem as far as retirement. My goal would be to work part time to keep some type of benefits and some money rolling in, but if my house is paid off and the kids are gone (financially able to make it on their own). We could live off of my PT income.
I am hoping for this goal to be acheived by age 55 (home paid off, kids out much earlier).