What Enquiring Minds Want to Know...

The question I am most asked by a landslide is, "How Much Do I Need to Save for My Retirement?"

Unfortunately not everyone likes my answer.

With all the information available about retirement, it's extremely difficult to find an answer appropriate for your specific situation.

So lets make it easy. Think 80% of your pre-retirement salaries to maintain a similar lifestyle in retirement. Now if you're partying like a rockstar or hanging with P. Diddy in the Hamptons every summer, it's a little more difficult to figure out but fortunately, for the rest of us in the real world, there are several factors that can help you work toward a retirement savings goal.

Retirement Age

When do you expect to retire? Most people are way off in their assumptions and usually will retire later than they actually think; health problems or workplace changes (downsizing, etc.), always slow you down. Of course, the earlier you retire, the more money you will need to last throughout retirement and folks are living longer. Much longer.

It's impossible for you you to know when you'll die but there are a few factors that may give you a hint.

You should take into account your family history—how long your relatives have lived and diseases that are common in your family—as well as your own past and present health issues. Also consider that life spans are becoming longer with recent medical developments. More people will be living to age 100, or perhaps even longer. Yikes?!

When calculating how much you need to save, you need to factor in the number of years you will spend in retirement. Think 25-30.

Another factor to consider is the cost of health care. Health-care costs have been rising much faster than general inflation, and fewer employers are offering health benefits to retirees. Long-term care is another consideration. These costs could severely dip into your savings and even result in your filing for bankruptcy if the need for care is prolonged.

Factoring in higher costs for health care during retirement is vital, and you might want to consider purchasing long-term-care insurance to help protect your assets.

Lifestyle

Another important consideration is your desired retirement lifestyle. Do you want to travel further than Broward County? Are you planning to be involved in philanthropic endeavors? ? Are there any hobbies you would like to pursue? Can you afford to take them up? The answers to these questions can help you decide what additional costs your ideal retirement will require.

Many baby boomers expect that they will work part-time in retirement. However, if this is your intention and you find that working longer becomes impossible, you will still need the appropriate funds to support your retirement lifestyle.

Inflation

This is high on the list. If you think you have accounted for every possibility when constructing a savings goal but forget this vital component, your savings could be far from sufficient. Inflation has the potential to lower the value of your savings from year to year, significantly reducing your purchasing power over time. It is important for your savings to keep pace with or exceed inflation. Factor at least 4% a year.

Social Security

The 20-80 Rule.

The Social Security system is going bust. Baby boomers are retiring and fewer workers are available to pay their benefits. And the reality is that Social Security currently provides only 20% of the total income of Americans aged 65 and older with at least $44,000 in annual household income. That leaves 80% to be covered BY YOU.

Sorry for the dose of reality but ther's no frosting on this cake.

MSN Money has a great retirement calculator so get to work.

I told you when I started this post that you wouldn't like my answer. Not many people do.