How much is 'enough' for retirement?
Is there a magic number?
Can you really set a goal for your retirement balance sheet? That depends on your adviser, your mindset and where you are in life.
"I don't know if there is a magic number anymore," says David Bendix, president of the Bendix Financial Group. "Try to save as much as possible as early as possible."
Ed Slott, CPA and author of "Your Complete Retirement Planning Road Map," agrees. "The problem with numbers is that nobody in their 20s or 30s knows the number," he says. "Even in (their) 50s, people don't know the number."
And even if you did, looking at what will likely be such a large number early on "can take the wind out of your sails," he says.
Instead, the trick is to make
saving a habit. "All you can do is put away
as much as you can, be consistent with it,
and you'll be fine," he says. "Pay yourself
But not all advisers agree with
the concept of saving without a finish line
in mind. "You'd better have a goal," Tignanelli
says. Toward that end, ask yourself where
you want to retire and what you want to do
in retirement, he says. Then look at the income
you're likely to need, the account balance
you need to achieve that and your risk tolerance.
However, as many retirees are discovering, plans change. Many retirees are postponing retirement or are working part time, either for health insurance benefits, financial necessity or because they enjoy it.
These days, many people are "realizing they might be working into their 70s," Bendix says.
"People aren't thinking 65 anymore," he says. "The landscape has changed."
the retirement math
Here's one "quick and dirty way" to get to
the number, says Peggy Cabaniss, CFP, president
of HC Financial Advisors in Lafayette, Calif.,
and past chairman of the national board of
the National Association of Personal Financial
Planners. Calculate -- in today's dollars
-- how much you'll need each year to live
the way you'd like in retirement. How do you
make that estimate? "Most people are going
to be living on 70 percent of what they have
now," Altfest says. "It's a perfectly good
rule to follow."
Once you have that amount in
mind, build in a cushion for emergencies,
vacations, out-of-pocket medical expenses,
etc., Cabaniss suggests. Next, subtract what
you'll receive annually from Social Security
and any pension plan you might have. You can
use Bankrate's Social Security benefit calculator
to estimate your future benefits.