The New Commonsense Guide to Your 401(k): Rebuilding Your Portfolio From The Bottom up

Chapter 4. Calculate Retirement Needs

"BORING," I HEAR you saying. Yes. And sobering, too. Some Americans worry about retirement practically from the time they start their careers. When I wrote for a magazine called Working Woman in the 1980s, women worried about it a lot. The magazine learned from a survey that even women with considerable wealth saw themselves living in a sinkhole and eating cat food when they were in their seventies. Working Woman called it the Bag Lady Syndrome. Since then, it's become a term that most Americans recognize as an unrealistic fear that many women have about their later years.

I'm not intending to discriminate against men here, because I'm sure that men can fret just as well as women. But in the 1980s, the bull market created a good deal of optimism. In the autumn of 2009, many investors again felt optimistic after watching the stock market, as measured by the Standard & Poor's Index of 500 Stocks rise 60 percent off its March lows. Yet this time is different because those lows were so low and virtually no one's retirement account escaped the plunge.

I don't believe we should beat ourselves up because we haven't saved as much as other thirty-year-olds or fifty-year-olds or retirees. Still, it's time to focus on the numbers.

There are lots of charts, tables and software programs to help you find out how much money you will need for retirement. Most assume that you will need about 75 to 80 percent of your working income to maintain a comfortable lifestyle ...