but if you have a 50% return on your money, just think how much you'd have!

Investment cat is using the wrong knot for his collar style. Discourages me from investing with him.

Yep. I'm a youngin and I can't depend on social security (nor would I want to) so I am putting 1k in savings a month and doing the company 401k.

Well, if you're retiring soon, hopefully you moved your stuff out of risky equities and into bonds before the latest market downturn (coughrecessessioncough). However, if you're not retiring for awhile, now's a great time to invest in your 401k because the market WILL go up again (eventually). I do like date targeted funds for investment neophytes.

I'm on track. Living within my means etc.

Save early and often. My neighbor in the cubicle next door has had the same steady accounting job for 12 years. She is the only person in accounts receivables. She should be saving a buttload, but she spends every freakin penny she takes in. She still rents a house and when her landlord sold out a few years ago and she had to move, she didn't have enough cash for even a security deposit. She finally started paying into her 401k when we explained how our employee matches half.

The columnist is dead on. No way am I going to count on Social Security to bail me out.

If you don't have a 401k through work, do a Roth IRA.

My gift to my kids is that they won't have to take care of me when I get old.

@chiieddy: 2045 baby!

wahooo.... 1.7% of the way there (should be roughly 2% but my 401k has taken a big hit this year).

Depending on the type of life you like to lead, when you retire and how long you live after the retirement date, it's easy for a person to need more than $1M. If a person retires at 65 with $1M and lives for 20 years, the person would have $50K per year (maybe a little more as interest continues to accrue on the amount remaining in savings). Hopefully this person has a lot less expenses than they did during their working life, but one major illness can wipe out that yearly sum pretty easily, not to mention maintenance prescriptions.

What if this person is married and the spouse doesn't have any retirement savings of their own? Now you're looking at $50k per year for two people.

I'm in my early 30s and have been planning retirement financials for several years. Now's the time to do it.

I always wonder about estimates like these. I haven't read the article, but is he talking 500,000 future dollars or today dollars? If he's talking how much I'll need saved when I retire in 40+ years, I'd be surprised if 1,000,000 2048 USD would really be enough.

I think it's the people who think that $500K is an exorbitant amount who are out of touch with reality. I would be incredibly scared if that's all I had at retirement, especially with increasing life expectancy. My minimum goal is $2 million; I would feel much better if it's at least $3 million. I don't think people truly think through what retirement entails: this is money that has to cover all of your living expenses until death. My company offers a Roth 401(k), and I contribute a total of 15% of my after-tax pay to that, meaning I will not be taxed on that at retirement, when I will be in a higher tax bracket. Even if I stay in my entry-level position and only receive 3% annual raises, I'm on track to hit my retirement minimum goal. The key is to start early; you get the best return on your money and also never really miss the money because you never see it.

I don't know, $1 million dollars still seems a little on the low side to retire, especially if you retire around 55-60 and live for another 30 years or so.

I would say I'll need way more than $1 mill to retire on. I'm doing my best maxing out the 401k and the IRA each year but I think the gov should up the max. amount allowed and up the income caps on the Roth. If we are going to be responsible for funding our own retirements we need more tax advantaged ways to do so.

I also am getting more and more annoyed by the local (city and county) over generous gov. retirement plans (funded with my tax dollars). If I have to fund my own retirement (no more private pensions) so should the gov. employees (generous gov. pensions were put in place to help make up for gov. salaries that were less than private salaries, that is no longer the case). I can't afford to fund my own retirement along with paying the high taxes necessary to fund the gov. worker promised pensions. [www.nytimes.com]

at a 7.5-percent average annual rate of return

Hahaha.

I'm a little more than 5% there... but I'm only 26 so there's plenty of time to grow. With any luck I'll be able to retire early and live off my Roth contributions until I hit the age where I don't have to take a penalty for withdrawal

@Balfegor: So true. Does anyone under 30 really think SS is going to be around when they retire, or really be all that useful?

I'll also emphasize: put money in both your 401k _and_ your Roth IRA. If taxes skyrocket in the future, that Roth IRA might save you.

It would be nice if we were allowed to make a 7.5% ROI on the 6+% of our salaries we are required to contribute to social security. We would all have a decent start to a retirement account in 40 years. If you add the the 6+% your employer is required to match, it would be a nice chunk of change. Sadly, we will only collect a small pittance from Social Security.

We should spend the time fixing social security, or quite frankly eliminating it, before we try to educate the masses about the necessity of saving for retirement.

The thing I see about it is, a lot of people (especially now - it wasn't just the banks driving the subprime mortgage market) like to live rather high on the hog while they have a job, and they have some idealistic notion that they're going to be able to have that same level of enjoyment on a small retirement check. If people keep living longer (I plan to live to ~90, personally), they're going to hit a wall. Maybe you don't NEED $500,000 to $1,000,000 to retire, but if you like flying to visit your grandkids instead of hitchhiking, you'll need it (especially if you're still paying rent/mortgage on an apartment/house/property).

Isn't the strategic thing to do for young people is put enough in their 401K to max the employer matching and then put the rest in an IRA (if both are available)?

@nataku83: True, having a million in 35 years would be like only having 500,000 today, and that's if inflation stays at a steady 3% which I'd be surprised if it did!

Investing only makes money for investment brokers. You can't predict the future so spend all of your money now or save only for the short term.

If you think you are going to be old and die on the street, you have bought into the fear marketing.

Assuming my salary stays the same (it should increase by at least 5% per year), I'm on track for ~$3M in my 401(k) by the time I retire, so sayeth a quickie python script I wrote. Of course I think it'll be worth more like $1.2-$1.5M, given inflation and such. The house should be all paid off by then and the kids will hopefully have scholarships to colleges and not need to mooch of of maw and paw -- I've been promised a Ferrari upon retirement, but that money can't come from the 401(k). I think the Ferrari is so the soon-to-be-Mrs can cash in on my life insurance policy soon after I wreck the thing, then live comfortably in a custom-designed home in the woods.

Yeah, it's love.

@jscott73:

Who retires at 55-60 aside from dotcom millionaires?

Now, if only I could get a 401K in a currency that wasn't USD...who knows what those dollars will buy in 2048 when I retire at the age of 70? (I'm also realistic enough to assume a later retirement age)

that doesn't even seem remotely absurd.

@jillian: as far as i know you can't get 401k in other currencies but you CAN get CDs in things like pounds and euros. it's a higher minimum (10k) but it's doable.

@Triterion: Usually when they're talking about dollars in the future, they usually add a statement on the vein of "adjusted for inflation". If no such phrasing is there, chances are they are talking in terms of today's dollars. Which would make the estimate misleading.

@Johnny Blackshoe: If thats the way you want to live your life knock yourself out. But when your 80 don't come begging to me or anyone else for food or money. I sacrificed to be secure in my retirement, you didn't, so we both got our just rewards.

21 years old and 35% there. Woot!

Heresy! $246 a month would be better spent going to fund my monthly iPhone 3G cellphone bill. We're all going to die from global warming anyways right?

@Git Em SteveDave is a poor substitute for LindsayJoy: My boyfriend and I bought that same tie for his kitty not too long ago, and the cat actually wore it. Target, $1.99.

When i met with our financial guy, he suggested 4 million for me and my husband by the time we retire. (2 million each).

@Erwos: While I believe that there will be some changes to social security (the retirement age will likely rise a bit more, and they really should tax all earnings, not just up to the current $102,000), I don't expect social security to disappear.

That said, I don't plan on *needing* social security when I retire. --My plan is to have it be pure disposable income.

Of course, how much you need will depend a lot on how young you are when you retire, how long you plan to live (see Mom & Dad, e.g.), if you have the house paid off (and if it makes sense to sell it) and, most importantly, what lifestyle you are planning. Too many financial planners overestimate the money you need (and helping bump up the money they are paid because you have more money under management) because they use the 1st few years of retirement as an estimate.

After a couple of years of traveling, lots of retirees settle down on their spending because they have now done the things they wanted to or their health causes them not to travel as much. Living on $50k sounds like so little money until you consider you won't be making a house payment or health insurance or commuting costs and you can wear velour sweatsuits all day long and drive your 1997 Crown Vic until you kick off.

I'll have more than $1 mil when I retire, but I'm spending it on hookers and blow since I don't have any kids and don't want to outlive my money by too much.

My last yearly benefits statement indicated that if I keep contributing to my 401k until I retire and it has at least the 7.5%, I will have about $1.5 million in the bank. This is with a combination of contributing 15% of my salary to the account, the 5% employer matching, and the fund that I am buying shares in right now.

Being young though, my salary is going to continue to go up, so I will be contributing more.

You can retire on a LOT less if you're smart and eat a diet high in saturated fat and cholesterol. Then if you even make it to retirement, you've got like 2 years, tops, before you keel over. As an added bonus you get to forego like 25 years of arthritis and bingo games.

@Tmoney02: That's fine. Don't come crying to me when the market crashes and all of your investments aren't worth anything.

Ever notice what type of cars investment bankers drive, or houses fund managers live in?

Most people treat social security as something that will 'bail them out' or 'not be there' when you retire. Keep in mind, a prudent investor puts his eggs in many baskets. Plan your retirement accordingly. Invest in a 401k and IRA, save cash, invest in your home and believe it or not, include Social Security in your calculations. Despite everyone's doom and gloom saying that it won't be there, there are no plans whatsoever to get rid of it and the societal shift that needs to happen to get rid of it will never happen. Consider your monthly social security check a baseline and all your investments simply add to it. Though careful planning you can have a fine retirement.

This is assuming that the stock market does not/will not tank in the future... 7.5% ROI, hahahhaha.... employer matching ? on most cases on the company owned stock or non existent... in the mean time health care costs, fuel and food prices go up.... you are better off throwing a big ass party until you are 60 every year and just pull the trigger when you retire...

Waiting to die with nothing to do in a small ass apartment that you can barely afford, while popping pills to keep your blood pressure down.......... waiting to die... i pass

We will not live forever, the sooner you embrace that fact the better.....

I have a 401(k) but to be perfectly honest I'd really much rather have a pension sitting there for me 40 years from now. Putting money in a 401(k) is a pain when you have so little to start with, and it's not like I can really feel close to retirement.

I am retired with an adequate amount in retirement accounts. What bothers me is that I pay alot in income tax. My taxable income is the same as when I was working but now I have no deductions. I am paying ordinary income tax rates on distributions which are largely dividends and capital gains. This income would be taxed at a maximum of 15% if it were outside of retirement accounts. I know I saved on income tax when I made the contributions years ago, but each quarter I now send out huge checks for estimated taxes.

@SadSam: I'm a 26 year-in state employee looking at retirement. While it may be different depending on the state, the retirement fund in my state is funded by mandatory contributions I had to put into it during my time here. Plus I took that big hit in salary as others in my field (IT) went out and made a mint in the 90s (and are now unemployed or under-employed). I was looking for stability and security in exchange for the lower salary, so please consider that in your opinions. Taxpayers are not necessarily paying for these benefits in every state or locale.

@theutopian: Wouldn't the prudent investor plan for the worst case scenario and hope for the best? Another words assume social security is gone, inflation is crazy high, and rate of return sucks. If things turn out that way they are fine. If they turn out better they are excellent and sipping cocktails in Hawaii.

I'm 24 so $1 million will definitely be low for me. Assuming a 3% inflation rate (yeah, generous, I know), in 40 years $3 million will be equal to about $890,000 in today's dollars, so anyone in their 20s now better already have some $$$ growing in a 401k if you're hoping to retire before 70!

Bladefist:

Rather than putting 1k a month in the bank, open a ROTH IRA and contribute the max. You'll get a higher rate of return, and better tax incentives. You can have a 401k AND a ROTH IRA at the same time, taking advantage of both excellent investment devices. The other $650 a month of your 1k, put into a money market account where you'll usually earn 1% or so more than a savings account. Works just like a bank; comes with a checkbook, etc…

Well, I guess that is one good thing about my heart condition; I fully expect to be dead before I'm seventy.

I think I'm just going to have someone poison my tea* when I hit 65. No drooling in a nursing home for me! Plus, all that "retirement savings" is now "disposable income."

*ekthesy's retirement plan may not be suitable for all readers.

Setting some kind of "standard" for retirement is just as silly @ 1 million as it is at $500,000.

Thats why there are so many tools availible to gauge what you want to do with your retirement and how much you'll need to do it. If I want to spend my time in a shack in the woods, growing my own food, and just staring at a lake all day, yeah, $500,000 is going to work just fine. If I want to spend every day of my retirement renting out the top floor of the Ritz Carlton and filling it with hookers and blow, $1,000,000 probably isn't even going to cover the blow on the first day.

Its no different then the 10% of your income standard that used to be accepted for adequate savings. It may be far to much for your lifestyle, it may be woefully short.

I love these calculations. They usually require you to identify how many years you will live and what interest rate you will get. If these were at all possible to know, the calculation would make sense. The best you can do is use actuarial tables, which are, of course, not YOU.

That said, who is getting 7.5% return on their money. My 401K is currently earning a cool -13% (and these are fidelity funds).

@jdmba: My 401K is down 8.5% on the return over the past year, but for me it just means I'm buying more shares for the same amount of money, and they will go up later.