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

Chapter 5. How to Fill the Gaps

CALCULATING RETIREMENT needs may not be fun. But figuring out what changes you can make might be interesting, particularly if they are nearly effortless. A good retirement software program can help you look at all your assets—retirement accounts like 401(k) plans, pension plans, Individual Retirement Accounts (IRAs), as well as the equity in your home, the cash value in your life insurance, and other savings and assets you might have—and translate them into retirement income.

You can plug in your salary and your current rate of savings and see how much you fall short. Then you can see what happens if you save a little more or if you invest more aggressively. If you are in your twenties, the result of even a tiny change can be startling. Wherever you are, changing your habits just a bit can make a big difference.

The best place to begin is your company's human resources department. Most employers want their employees to grasp the enormity of the need to save for retirement. And they're doing what they can to help. Many provide tools that are customized to use your company's 401(k) plan and pension to help you see what you can expect from them and where you might fall short. Employers want their employees to save, and they want them to understand what their savings will mean when projected out thirty or forty years. Remember though that these numbers are not a guarantee. Every calculator does some things right and makes some assumptions that might turn ...