Roger Nusbaum submits: Barron's had an article that questions the assumption that people should plan on needing 80% (I thought it was more like 70%?) of their pre-retirement income after they retire.

This is something I have written about several times; the first time was more than two years ago.

After sorting out expenses that are likely to go up after retirement and the ones likely to go down, I think most people would find that overall their total outlays would go down.

As far as how much you need to save; I have recently stumbled across a couple of different people that came up with a similar notions. One said that for every $1000 you spend per month you need $230,000. The other person came up, I think, with $240,000. One of the two was Paul Farrell, and I'm sorry I don't recall the other.

Applying this to real people; Joellyn and I spend just under $3000 per month (this includes travel, does not include what we save, we have no mortgage and just one car payment). Other than the car payment and what we now save, our expenses are not likely to go down too much; we obviously live modestly on purpose. This implies we need $720,000 in today's dollars. Assuming 3% annual inflation, our expenses would double in 24 years and so our nest egg would need to be worth $1,440,000 in 24 years. Here I am just using the rule of 72.

If equities double every ten years, which assumes returns on the low side, the numbers have a chance of working out.

I tend to be conservative when it comes to planning, so I am not counting on Social Security which would cover a lot of our needs. I am planning to work for as long as my mind will continue to function.

If your life is simple (I realize ours is peculiarly simple) then the planning can be simple. Things like working in your career longer, eBaying away your crap (or in our case my in-laws crap), doing a new job in retirement or anything else you've read about that retired people do for money serves to reduce the stress on your portfolio. The numbers above assume a roughly 5% draw down. Anything you can do that could bring that down to something like 3% should be explored.

If you don't want to pay for help with planning, you do need to work out these numbers for your situation, and know what you are facing. Also not discussed here are surprises like health issues, financially having to bail out an adult child, or anything else you can think of.