Comments on: Ask the Readers: How much time do you spend each year planning for retirement?

By: Nina

Nina — Tue, 25 Nov 2008 13:01:47 +0000

Rhea: I agree that the various "calculators" often arrive at the different amounts for "the number." For me personally, I've tried to err on the high side just to be sure. Serena: I think the last part of your comment would make for an interesting post. Why? To be honest, I never really knew that the local branch of most banks offer financial planning services. I'm curious how you settled on this option. I wrote a post long ago about When Do You NEED a Financial Planner and think that your thought process as a twentysomething (and that you're risk averse!) would be a perspective worth sharing with readers. S: I'm glad you brought up the needing "85% of your current income in retirement" rule of thumb. Here's what I think is a really good article on this topic because after all:

Rules of thumb are shortcuts; they're solutions that are supposed to work for the "average" person.

And what is average?? We're all so different... that it makes the advice out there even more confusing sometimes.

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By: S

Mon, 24 Nov 2008 21:45:40 +0000

I put myself in the 5-10 hours/year category. That's about how long it takes me to run numbers through a couple of online calculators, and to rebalance my 401K once or twice a year. What I find both amusing and frustrating is that different online calculators yield very different results. I've gotten answers ranging from "you need to save 3% more every year than you're saving now" to "you could quit saving anything more and be fine." I also put little stock in the traditional wisdom that you will need 85% of your current income in retirement. By the time I retire, I will no longer have a mortgage; I won't have childcare expenses; I won't be saving for retirement or my child's college education. And yet these currently account for over 50% of my income. So I take the online calculators with a large grain of salt, save diligently through my 401K, and focus my efforts on living below my means so I can afford to save more, rather than on coming up with some magic target number.

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By: Serena

Serena — Mon, 24 Nov 2008 17:35:58 +0000

Good post, Nina. I read a book a few years ago called "The Automatic Millionaire" and it was about how to save $1 million for retirement. The book says that if you automatically put $25 into savings each month starting at the age of 25, you'll have $1 million by the time you're ready to retire. I started a little bit later than 25, but right now I have my Roth IRA savings account, as well as an old 401k from my previous job that I will roll over into my Roth when January rolls around since I'm already maxed for this year. For me, the trick really has been to make those savings deposits automatic so that I never see the money and never have an opportunity to spend it. I've met with the investment planner at my bank to talk about more aggressive savings strategies since I'm still really young. He recommended mutual funds with a high percentage in the stock market. But that just doesn't feel right for me. I'm pretty risk averse.

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By: Rhea

Rhea — Mon, 24 Nov 2008 16:19:19 +0000

Oh, yeah. I'm guilty of not spending enough time on it. I have tried numerous 'calculators' and you get different results each time. And there is so much conflicting information out there ("You need a million to retire"; "You need $500,000"; "You need 2 million") that I just give up.

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