Daily Money - When Retirement Seems Like a Long Shot

Figuring out retirement is a numbers game, and it comes with a lot of questions.

When should you retire?

What if you haven’t saved enough?

How much is enough for however many years of retirement you can expect?

Retirement questions are especially thorny because they invariably bring up gigantic sums, the kinds of amounts that most of us figure we’ll never be burdened with. A million? Five million? Even a half-million?

Who has that kind of money to set aside? If you’re thinking, “Well, millionaires do,” think again.

In a recent survey, about a third of millionaires — that is, people with assets in the seven figures  — surveyed said it'd "take a miracle" to have a secure retirement. Even more surprising: the median retirement savings of the high-net-worth individuals surveyed was just $650,000. The rest of their assets were in less-than-liquid forms, notably equity in their home.

I admit those big numbers are scary. One thing to keep in mind is that, like all of personal finance, retirement savings is a personal number for you and your life. Sure, some champagne retirees might need millions in savings to support a penthouse lifestyle and cruises down the Danube. But many of us will be perfectly happy with a mortgage-free home and a couple of trips to a national park.

My advice: Ignore the noise surrounding big retirement numbers. If you want a sense of how much you’d need for a comfortable retirement, start by calculating how much you spend in a year on the essentials. NOTE. Multiply that by 20 or 30 for a sum that is likely to get you through the retirement years. If there’s a shortfall — you certainly won’t be alone in having one — the strategies are: find ways to spend less, or earn more, work longer, make lifestyle tweaks. You might consider moving to an area with a lower cost of living. Don’t forget to factor in potentially higher health care costs as well as budget for travel, if your dream retirement includes a lot of trips.

For more on the problems millionaires are having with retirement savings, read our reporter Mary Ellen Cagnassola’s story here.

— Jill Cornfield, deputy editor

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