 How
to save for retirement
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 Dear
Dr. Don
I am 45. I began saving for retirement in a Roth IRA at age 38.
I have $17,000 in the account. I have no benefits at work as a per
diem RN. We are using my income to pay off all debt and we will
be debt free, including our mortgage, in July. My husband is 39.
He has a profit sharing plan at work. His employer puts in 15 percent
and we put in the rest to max it out. That account balance is $120,000.
The way I figure, even with this, we will never have the $3 million
I've read that you need to retire and be able to live off the interest
by age 65. Am I missing something? What else can we do?
-- Kathy Conundrum
 Dear
Kathy,
I just read an interesting review of
a new book written by Lee Eisenberg called "The Number."
In the book, Eisenberg looks at different approaches individuals
use to size their retirement nest egg, including yours. I plan to
read the book, but since I just started reading a copy of "1776"
that a friend loaned me last August, it may be a while. You'll have
to decide on your own whether to put it on your reading list.
I take the point of view that you should spend some
time reflecting on what you want out of life, and look at how money
can help you attain it. Spending the next 20 years trying to reach
a savings goal of $3 million that you read about somewhere but don't
understand isn't realistic retirement planning and will cause you
to miss out on a lot of living along the way.
Retirement planning was often referred to in the past
as a three-legged stool, where one's financial stability in retirement
was based on the three legs: pensions, government benefits and personal
savings. With one leg, pensions, cut out from under the retirement
stool for many workers, and another, Social Security, looking a
little wobbly, there's undeniably a lot of pressure to increase
personal savings.
The good news in your situation is that you've already
taken steps to create financial flexibility in your monthly budget
and will be able to increase your monthly savings after the mortgage
is paid off in July. You can ramp up your savings to improve the
odds of having a comfortable retirement.
There are a lot of alternatives to living off the
investment earnings of a retirement nest egg. They include the use
of annuities, reverse mortgages and inflation-indexed investments.
Using insurance coverage to serve as financial protection in retirement,
specifically long-term care insurance, can reduce the amount of
money needed in retirement for that expense.
Meet with a fee-only financial planner to talk through
your retirement concerns. The National Association of Personal Financial
Advisors, NAPFA,
can help you find a fee-only planner in your area. Don't be shy
about getting a second opinion if you have concerns about the advice
you receive.
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