Retirement Roulette
Newsweek. May 11, 2008 Issue
Wondering How Much You Ought To Save For The Future? Lots Of Luck Finding A Good Answer.
HOW MUCH MONEY WILL IT TAKE TO RETIRE? THE figure you hear the most often is a nice, round $1 million, and it probably depresses you. Most people will never acquire such a luxurious account. If it makes you feel any better, $1 million 20 years from now is ""only'' $550,000 in current dollars--but that might also sound like a figure from la-la land.
Luckily, you won't need that much in savings, unless you're feeding country-club tastes. Just ask the retirees you see around you. They're sitting comfortably in the middle class on savings of considerably less. Your life shouldn't be very different from that.
So where does this famous $1 million estimate come from? To find out, the reporter for this column, Temma Ehrenfeld, 36, put her finances on the line. She called firms that advertise retirement planning and asked them for help. She didn't disclose that she was working on a story, but went to appointments armed with her real-life personal finances: salary, vested NEWSWEEK pension, 401(k) plan and the savings outside her 401(k). The advisers ran her data through their computer programs. Bottom line, she asked for the answer to a single question: ""How much should I save to be sure I'm going to be OK?''
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