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Dr. Don Taylor, CFA, advice columnistSaving enough to retire

Dear Dr. Don,
Hearing so much lately about saving for retirement I get nervous if we are doing enough. My husband works for the federal government so we feel pretty safe about his pension, which is supposed to be 42 percent of his highest three years. His current salary is $102,000 and he has been with the government for almost 10 years.

We put $525 every two weeks into his 401(k) and with the government match it ends up being $720. We are only 35 and the account currently has $100,000 in it. My husband plans to work until 57, when he will be forced to retire.

We do plan to increase our contributions to the 401(k) to the maximum limit, but I am a stay-at-home mom so we increase when we are able. My husband does also plan to get another job after the government since he will still be young. Should we do more after we max out our 401(k)? Or will that and the pension be enough?
-- Paula Portfolio

Dear Paula,
I'll assume that your husband is participating in the Thrift Savings Plan, or TSP, and not a 401(k) plan. His every-two-week contribution of $525 combined with the $195 matching contribution makes for an annual contribution of $18,720. His annual contributions, which don't include the match, are pretty close to the maximum contribution, $13,650 versus $15,000 for the 2006 tax year. Don't worry about not contributing the maximum.

With an account balance of $100,000 in your mid-30s and a commitment to future retirement savings, you should be on track toward meeting your retirement goals. The TSP Web site has a projected balance calculator that will help you estimate how your retirement savings will grow over time.

The retirement savings are there to finance the gap between the income needed in retirement and the income provided by his pension and Social Security benefits, if eligible. Whether you're putting enough aside for retirement depends on how long you have until retirement, how the money is invested and what financial goals you have in retirement. Try using the Ballpark E$timate at the Choose to Save Web site to see if you're on track.

You can be too conservative in how the money is invested. Periodically reviewing how the money is invested is an important part of retirement savings. Get professional help from a financial planner if you want to gain a comfort level about how the money is invested. A Bankrate feature, "Finding an independent financial planner," can help you find a planning professional.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "financing a home," "saving & investing" or "money."'s corrections policy -- Posted: Sept. 7, 2006
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