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Retirement is a numbers game

Do you know your number?

That would be the amount of money you need — including your Social Security and a pension, if you have one — to retire comfortably.

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A few years ago, the financial services company ING developed a humorous advertising campaign around “Your Number.”

The nonpartisan, nonprofit Employee Benefit Research Institute has been asking people for years about their confidence level when it comes to their ability to have a financially secure retirement.

The most recent survey shows that many Americans are not very optimistic.

The EBRI found that 21 percent of respondents are not very confident about retiring comfortably, and 28 percent aren’t comfortable at all. The latter figure is the highest percentage since the institute began surveying confidence levels.

So why are people so pessimistic?

It’s partly because they don’t know how much they will need for retirement.

Fewer than half of workers (46 percent) surveyed report they and/or their spouses have tried to make that calculation. And when asked how much they think they need to save, their estimates were high. Twenty percent guessed that they needed to save between 20 percent and 29 percent of their annual income, and nearly one-quarter said they would have to save 30 percent or more.

“Many workers believe that they have to save substantial, perhaps even unreachable, percentages of their income each year to achieve a comfortable retirement,” said Jack VanDerhei, EBRI research director and coauthor of the report. “In many cases, these savings targets are aggressive, but they may not be based on a careful analysis of their individual circumstances.”

There are many calculators to help you find your number. The EBRI and its American Savings Education Council have created a retirement planning calculator, “Ballpark E$timate,” at www.choosetosave.org.

It’s likely when you do a retirement calculation, you’ll see a big number. And you may find you’re not on track to hit it.

But as scared or discouraged as people get, once they know their number they can set more realistic targets, VanDerhei said. Perhaps you’re thinking your number might not need to be so large because you’ll just work longer. But what if you can’t work? Almost half of retirees had to retire before they expected, according to the EBRI.

“The survey results contain a lesson for workers: Do not put off too much saving,” Greenwald said. “Plan to save at least a foundational amount by age 60.”

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