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Bankrate's 2008 Retirement Guide
Turbulent times
Retirement plans for many are in jeopardy. Understanding the problem is the first step to recovery.
Turbulent times
How much is 'enough' for retirement?
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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 first."

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."

Doing 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.

-- Posted: Nov. 10, 2008
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