How Much Money Do You Need in Retirement?

     A survey done in April by the Employee Benefits Research Institute, a Washington D.C.-based nonpartisan, nonprofit research organization, concluded that people are feeling better about retirement than they were just a few years ago -- although they're still not as confident as we were back in our day, the halcyon days of the 1990s.

     Today, almost 60 percent of American workers feel relatively comfortable that they will be able to finance their retirement, compared to fewer than half during the Great Recession -- but less than the 70 percent in the mid-1990s who figured they had enough resources to support a comfortable lifestyle after they left work.

     What's interesting is that people who are already retired have greater confidence in their financial future than people who are still working. Over 80 percent of current retirees say they have enough money to pay for their basic expenses. And 78 percent of retirees feel confident they can afford their medical expenses, compared to only 56 percent of people still working who think they will be able to afford medical care after they retire.

     Perhaps this reflects a difference in views toward Medicare. We expect that Medicare will be there for us. But apparently our children are not so sure. Only 43 percent of today's workers think that Medicare "will continue to provide benefits of at least equal value to benefits received today."

     One thing that strikes me about the report is that 59 percent of retirees believe they have enough money to pay for long-term care, such as a nursing home or at-home care, should they need it. I don't know how this can be true, considering assisted living can cost up to $10,000 a month, and a nursing home even more than that.

     Last year (at B's encouragement) I purchased a long-term-care insurance policy, and I'm still not particularly confident I can afford to survive in an assisted living facility for very long. I guess if you go broke, they put you on Medicaid and (as happened with the father of a friend of mine) send you down to the end of the hall where the rooms are smaller and the services not quite as good.

     So how much money do most people think they need to have saved up by the time they retire, so they can live comfortably? About a quarter of those surveyed say you only need something less than $250,000. On the other end of the scale, 20 percent figure you should be sitting on at least $1 million to live a comfortable lifestyle after you leave work.

     Of course, a lot of that depends on whether or not you have the benefit of a pension plan. Obviously, if you're receiving 80 percent or more of your salary from a defined-benefit plan, you don't need to have much in the bank. But if you have no pension at all, you'd better have something substantial to supplement that Social Security check.

     Finally, what percent of your pre-retirement income will you need to live comfortably in retirement? Most people say it's somewhere between 50 and 70 percent. But a significant number of people think you'll be perfectly okay with less than half of what you were making while you were working.

     I know in my case, my expenses went way down when my kids finished college, moved out and began careers of their own. No more diapers to buy; no more sports equipment; no more college tuition. I'm also saving money on medical insurance, now that I'm on Medicare, and at some point in the not-too-distant future Bridge and I will be moving to a smaller house with lower taxes, lower heating bills, and (hopefully!) no lawn maintenance.

     So just suppose, someone in their 50s comes up to you and asks, "How much money do I need to retire?" What would you tell them?