Funding Retirement (3)

You became a retirement saver the day you collected your first paycheck. The proof is on your statement - labeled "FICA". But Social Security itself never has, and never will help you afford the "good life". Social Security was designed to be an income supplement only. Pension plans and savings investments are key in retirement planning.

If your goal is to afford a comfortable retirement, you'll need to have some figure in mind. A good rule of thumb is to figure that you will need 70 to 100% of your preretirement income. Will you stay in the home you have or move to a less expensive place? Do you plan to do a lot of traveling, stay at home or plan for something in between? The answers to these questions and others will determine your overhead. The kids are usually on their own when you retire but expenses such as mortgages and car payments should also be kept in mind.

Source: Schiffres, M. & Knestout, B. (1999). How to invest for retirement. Kiplinger's, p. 80.