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Do you have enough to retire?

By Jennie L. Phipps ·
Thursday, January 10, 2013
Posted: 2 pm ET

People frequently ask how much they'll need to retire. There is no one-size-fits-all answer. You'll need what it takes for you to live on. Getting to that number is the first retirement planning step.

It's a little like making a budget. List all the things you currently spend money on -- mortgage or rent, utilities, car payment, gas, health and auto insurance, health care that's not covered by insurance, clothing, groceries. After you've identified all the big-ticket items, add in the smaller items -- auto maintenance,  pet food and vet fees, club dues and related expenses, Friday night dinner out, gifts for the grandkids, a week at the shore. Whatever you spend, put it in there. You can always take it out later if you decide you can't afford it.

Add up the annual total, and you have a rough estimate of what you'll need in retirement. It may not be much lower than it is now. Most people's expenses don't go down a whole lot when they stop working, but you will lose some costs of commuting and other expenses related to working. And if you have been saving for retirement, you don't have to include that.



Add all these income totals up, and compare them to your costs. If you aren't bringing in enough to cover your nut, you'll need to work and save more. But if you have enough, congratulations.

Your next step is to find a retirement planner who will help you make this analysis more sophisticated. In particular, you'll want to see the effects of inflation on your retirement. It can be a killer. You also may want help considering ways to use something such as an annuity to make your income more stable, especially if you don't have a defined benefit pension.

None of this is rocket science, but it isn't simple either. The reward for a little hard work is a better sense of your ability to live securely during your oldest and frailest years.


January 11, 2013 at 8:19 am

So the trick is living within your means, duh! I think that is a good idea if OUR government did that too. Wait, wait, the government does not have to because it can just print up money or make magic coins out of platinum with Obama's face on it and presto, the debt is covered. Hardy har har!