Financial Futures

Martha Hamilton, writer of the "Financial Futures," column appearing weekly in The Washington Post Sunday Business section, was online Tuesday, Sept. 26 at Noon ET to discuss her new column about making smart decisions when preparing for retirement. This week, she analyzed the financial planning of three people turning 30 this year.

For this discussion, Martha was joined by Dallas L. Salisbury, CEO of the Employee Benefit Research Institute, to help answer your questions about retirement planning. As we become increasingly responsible for our own retirement income, what kind of preparations do we need to start making? Martha hopes her column will explore what readers want to know about their own financial futures.

The transcript follows:

____________________

Martha M. Hamilton: Hello, and welcome to our first on-line chat. I hope we'll all be learning together what we need to face financial planning for retirement. I don't know about you, but when I entered the workforce I didn't realize how much I would be required to know about investing and financial management to make sure I have a decent income when I stop working. I'm joined today by Dallas L. Salisbury who has headed the non-profit Employee Benefit Research Institute since it was founded in 1978, so he's been paying attention to these issues for decades now. I've gotten lots of e-mails from readers since the column launched on Sunday. Your questions will tell me what I need to learn and write about going forward. I should throw in one caution. I am not a financial advisor. I can't recommend investments.

_______________________

New York: Dear Martha and Dallas,

Maybe it's just envy talking, but why are we taxpayers expected to keep funding the incredible benefits packages of our federal employees? I'm a dyed-in-the-wool, donated-to-John-Kerry liberal (or at least I thought I was until I read about Adam Black's likely retirement package), but I don't think it's fair that public employees should get such great benefits. And by the way I don't think that his salary of $85,000 at age 30 is all that below-market even for presumably highly skilled workers such as Mr. Black. I'm not that much older than 30 and I was making something similar in a supposedly lucrative part of the market (financial services) with the benefit of both Ivy League undergrad and graduate degrees.

Maybe it's time to start voting Republican ...

Dallas L. Salisbury: Total compensation is something that exists in all sectors of the economy. Some private firms have stock options, etc. In theory, if federal employees did not have a pension and health benefits, they would be paid higher salaries, just like private workers at General Mills or.........

Neither political party has suggested that federal workers lose their benefits, to my knowledge.

_______________________

Washington, D.C.: I have no idea how much money I should have when I retire. At 36, I have $39K in an IRA (rolled over from old employer's 401(k) account), another $10K in a taxable investment account and $500 in a regular passbook savings account. In a few weeks I will be able to start contributing to 401(k) at my current job and my plan is to put in 12 percent of my $64K/yr salary (their match is 3 percent). I put $100/mth in the IRA and $100/mth in the investment account and nothing in the passbook savings right now. My debts are few: mortgage, AMEX (which I pay off monthly, obviously) and one interest-free credit card I have a tiny balance on ($300) that I'm just paying off over time cause I can....anyway, how do I figure out how much I need to have to retire comfortably? I'm single, no children.

Dallas L. Salisbury: Go to http://www.choosetosave.org/ and complete the ballpark e$timate worksheet. It will give you an estimate of what you need. You can re-do it every year and stay on track.

_______________________

Nonprofit saver: I read this week's business section with great interest as I am turning 30 next year. As a writer, I never made much money, and now I work for a nonprofit that doesn't offer matching in our 403(b) savings plans. I imagine I will be in the nonprofit world for a while and have no idea if I will ever get married so I am quite concerned about my financial future. Please address nonprofit workers and lower-salary earners in your future articles. I couldn't identify with your 30-somethings...I make $40k/yr and live in the D.C. area (somehow)!

Martha M. Hamilton: I know it's hard to set aside savings when you're not making much money, but knowing what I do now, I hope you're setting aside money in your 403(b), even without the match. I hope to look at the non-profit landscape in the future to find out what the norm is in terms of retirement benefits.

_______________________

Beltsville, Md.: Ms .Hamilton I really enjoyed your column on Sunday. Will you continue to look at each age group such as 40+ in your future column?

Martha M. Hamilton: Absolutely. I'm going to be looking at the needs of every age group as we go along.

_______________________

Priorities...: Suze Orman says to only contribute as much as your employer will match for retirement until you've bought a house. By the looks of things... I may not be able to buy a house for another 10 years, so I'm wondering if perhaps that is a little shortsighted? Aside from DEFINITELY contributing as much as my employer will match in my 401(k), how do I decide what gets saved for retirement, and what gets saved for a downpayment? Thank you!

Dallas L. Salisbury: Orman wants you to not leave any money on the table (the matching contribution) and move quickly to buy a house. I tend to think it is best to start by saving 20 percent of total income (in a 401(k) to get the match then where ever it is most comfortable for you) and then figure out what else you can do. Have a budget and do not borrow money. Match your lifestyle to the after savings income. When you buy a house -- do not spend more than 20 percent on the monthly total housing cost. A house is a roof over your head, it is not an investment, in my view, and in that I disagree with Orman and many others.

_______________________

Washington, D.C.: I'm 30, can you analyze me? I have $39K in my TSP invested in the lifecycle 40 fund and I invest 15 percent of my $75K salary annually. I also have $13K in savings account, 6 CDs at $10K each (3 - 6 mths, 3 - 12 mths). My only debt is my mortgage at $185K and my car at $12K. I'm debating about taking out a ROTH IRA? Should I move the $$ from savings into something else?

Dallas L. Salisbury: You can actually do it yourself. Do the ballpark estimate worksheet at choosetosave.org

_______________________

New York City: I hope you can help me. I don't know what to do. I haven't worked in two years because I've been at home taking care of my elderly father. He ran out of money, so I emptied my savings accounts and my IRAs. Yes, I paid a big penalty, but I didn't know what else to do. Right now, we're living on his Social Security check. It isn't enough, so I've been borrowing against my credit cards. He can't go on Medicaid because he would lose his house, and if he lost his house, I wouldn't have anywhere to live, because I live with him and take care of him. What can I do? I don't have the money to put him in a nursing home, and as I said, Medicaid isn't an option, because then I would have to live on the street. I don't even have a car - I had to sell it to get the money. I also sold all of my jewelry and most of my clothes. I can't remember the last time I had a haircut or a pedicure, and I need both of them very badly, but I can't afford them. Luckily, a friend gave me a computer. Thank you so much for your help.

Dallas L. Salisbury: Your father is a lucky man to have you. But, you are digging a very deep hole. Have you met with the Medicaid people? I hate to say it, but you may build up so much debt that you will have no choice but to sell the house. Better to sell it before that and do what you need to do to get your father care. If that means Medicaid and a nursing home, do that. Then find a job and pull your life together. Your life risk beyond the debt you are building is the loss of job skills and building seniority. That will put you at a disadvantage when your father passes and you need to re-enter the job market.

_______________________

Arlington, Va.: I am 26 years old. I contribute 6 percent to my 401(k) (my employer matches this). This is all that I am putting away for retirement right now. I am trying to focus on paying off debt, and saving for a house/condo. Am I doing the right thing? Should I be saving more for retirement?

Martha M. Hamilton: You're off to a good start by contributing 6 percent to your 401(k). If your debt is high-cost, that might be a higher priority for now, especially since housing prices are falling and time is now on your side. As you pay down the debt, you might want to gradually increase your 401(k) contribution. It's the act of will in making the increase that's always the hardest. Once it's done, you often don't even notice it.

_______________________

Springfield, Va.: I am age 63 and I draw social security disability ($800) plus I have a small ($565) annuity plus a govt pension of $1,100 a month. I need more money to survive. Do you know of any other source of money I could tap? My family helps me but I am running out funds there.

Dallas L. Salisbury: I know it will not make you feel any better, but you have more income than more than 2/3 of all retired Americans. Even if it means moving to a lower cost area, home, etc. you need to find a way to lower your living expenses, unless you are able to work and gain earned income, which it appears is not an option. Physical relocation to lower cost areas is going to have to happen more and more in the decades ahead.

_______________________

Washington, D.C.: Regarding NY's question about the incredible benefits packages of federal employees, I wonder if it was motivated by the urban myths about congressional members etc. being outside of Social Security and/or getting incredible pensions. My TRS package as a Hill staffer was fine but no better than what was available to me elsewhere. Many people believe that federal employees get 401(k) matches plus pensions beyond what is actually available.

Dallas L. Salisbury: You are correct. The federal govt is a very large employer and the total compensation package is lower than that of many large private firms. Compared to many small firms it is higher. Mis-information is always a problem

_______________________

Washington, D.C. area: So what does one do in their mid-40s? How do you make a choice between funding retirement vs. paying off debt? Should someone that is in their mid-40s with not enough money for retirement stop contributing to retirement to pay off huge debts first? Is it simply looking at interest rates -- that is, if interest rates on debt are greater than 8 percent, pay down the debt, otherwise, put the money into retirement?

Martha M. Hamilton: That's a really good question, and one I struggle with myself. Interest rates are a key part of it, but so is the nature of the debt. Right now I'm most focused on my variable rate debt because the Fed has been raising rates. Dallas may have something more useful to say.

Dallas L. Salisbury: Should you have an option that gives you a matching contribution, then save at least that much. If you are convinced that you can stop all saving that is not essential to life, and use all other funds not saved (beyond enough to get the match) to pay debt, then do it. I have seen many others that are not capable of cutting spending -- even the extras -- and cannot ever avoid debt due to a total lack of discipline (including an inability to just say no to the kids, face public school, etc). They put money into retirement plans because it locks it away. So, if you do not save it, will you for sure use it to pay debt? Only you know that about yourself.

_______________________

Should I go or should I stay?: I'm trying to figure if I can retire early. I've gone over and over expenses vs. pension. It's hard to determine how much money you need each month to spend on unfixed expenses. Most of my purchases are on my credit card, which varies from $550/mo. to $2,000. Obviously it depends on what you choose to buy, but is say, $400/mo. enough to get along smoothly? Retirement looks like something you really need to try out but it's a do it or not decision...

Dallas L. Salisbury: Sounds to me from the limited information that the answer is no. If your pension increases with inflation like Social Security does, then it is a little better, but what about health care? And, based upon family history, how long might you live. My dad is 93 and mom is 90 and at birth they were told life expectancy was lower than 65! So to have a 90 percent chance of enough you have to assume long life, high expenses, etc. My view about retirement, is if in doubt, do not retire. Try our ballpark estimate worksheet at www.choosetosave.org

Martha M. Hamilton: The more I get into this, I think early retirement is a bad decision unless you have a compelling reason, such as a partner with failing health with whom you want to spend more time while you can. Now that inflation is back, after not being much of a factor for many years, I'm worried more than ever about not having enough money to retire. As for getting a handle on your expenses, that's hard work. Some folks recommend taking six months of expenditures, including those recounted in credit card bills, and getting a monthly average of what you spend. I'm trying an experiment right now, writing down what I spend daily, including those expenditures I put on credit cards.

_______________________

Washington, D.C.: I am 28, have recently inherited a modest sum of money (around $10,000), and would like to invest it. I am considering investing in multiple index funds so that I can passively manage my investments. Are index funds the way to go and where can I learn more about index funds (i.e. benefits and drawbacks to them)?

Dallas L. Salisbury: Go read a book by John Bogle, the father of index funds. Remember that money in the markets is money you can afford to lose, and if it declines in value you will not panic and sell. With that amount of money the Bogle advice would be to put it all in a total stock index fund if you want stocks, or split with a total bond index fund, if you want diversification. I do not have investment advice for you of my own, as I an not a registered investment advisor. Check out sec.gov and nasd.com for good info. _______________________

Alexandria, Va.: My employer offers a cash-balance retirement benefit. I have no idea what it is?

Dallas L. Salisbury: It is a defined benefit plan for which your employer covers all costs. Should you stay long enough to become "vested" you will have a right to a benefit. In most cases that will be the option of an annuity or a single sum distribution. You can go to www.ebri.org and go to our fundamentals of employee benefits book for a chapter on cash-balance plans.

_______________________

Silver Spring, Md.: What exactly are the benefits of starting a 401(k) early as opposed to later (i.e., 25 as opposed to 30)? I keep hearing that the difference in the dollar amount is significant in the long run. Why is that? And is there something substantially different about when you do it younger as opposed to older that makes it so much more profitable?

Martha M. Hamilton: It's the miracle of compounding. As I noted in the column, if you start setting aside $1,200 a year at age 30, assuming a 10 percent return on investment, at age 65, you'll have $394,847, according to financial planner Ric Edelman. Set aside the same amount 10 years later, and you end up with only $144,120 at age 65. Your money works for you, and the more years it has to work, the more money you have.

_______________________

For Springfield, Va. retiree: If you have relatives or friends that have a college student who want to rent a room from you, this may be an option. Room and board at colleges start at $7,000 from Aug-May. Some young responsible relative may want to stop living with the parents but doesn't want to take the full leap from family.

Martha M. Hamilton: That seems like a useful suggestion. Thanks.

_______________________

Washington, D.C.: I think what people will need to address in the future is how to advise young adults to save for retirement, when they are part of the "extended adolescence" population: instead of working steadily throughout their twenties and saving money for retirement, they travelled, did volunter work, went to grad school or worked a succession of low-paying $25K/year jobs.

You're right, I'm talking about myself. I am already 30, and I've just finished grad school and I'm unemployed with no job prospects in sight. I did a lot of job hopping in my twenties because I didn't know what I was going to do (and I never held a job that paid more than $30K/yr because I could only get hired at entry level!). Now, at 30, my financial situation is exactly the same as it was when I was 22, and even slightly worse--I have no house, no savings, thousands of dollars of debt, and next-to-nothing health insurance coverage.

Your profiles REALLY depressed me and made me feel guilty for having all the freedom I had in my twenties. Saving for retirement when you're young seems to me to work better only if you stay in one field, don't go to grad school, and don't travel abroad. But if you have the means to pursue those options, can't you do them as well? It seems if you follow the tradition advice for saving for retirement (save $2,000K a year during ages 22-35), you can't.

Dallas L. Salisbury: I am a bad person to ask that question since I have worked since I was 14 and I did not take advantage of a summer in Europe during college because I thought I had better work and save than see Europe. I did college in three years by going all year and working all year. Then I began full time because I did not have money to do anything else. At 57 I have never stopped saving and working so that I have flexibility. So go get an entry level job -- even if it only pays 15k or 20k -- and get started. No matter what it pays, save 20 percent and live on the rest. Match your lifestyle to your income. No debt. At 22 you could have gotten to where you need to be with a lower percentage for savings, but time is money (and lost time for the magic of compound interest).

_______________________

New Jersey: Roth IRA vs. 401(k) - which to choose I have a fear that my question is one without an obvious answer. I am 50, am contributing (including my employer match) 25 percent of my income to my 401(k). I am still not near my annual max 401(k) contribution.

Should I start thinking about a Roth for some of this money or for any additional money? Can it make a real difference, which one you choose? On the one hand, I don't care about leaving any estate and putting away before tax money now definitely helps me. On the other, I have a great fear that the huge deficits are going to lead to huge tax increases in the future. I wouldn't mind paying somewhat higher taxes, particularly if it funds national health insurance, but I do not want to pay large tax increases to pay off the current deficit.

Dallas L. Salisbury: I am putting money into a Roth because I am at the maximum tax rate today, and I agree with you that it will be far higher in the decades ahead as we deal with deficits, SSA, Medicare, etc. Were I now in a low tax bracket I would also use a Roth. I would save enough in the taxable 401(k), and I do, to get the full matching contribution. I should add that I, for the same reasons, do not like to pay mortgage interest just to get a tax deduction. I have never understood why I should be happier giving my money to a lender than a smaller amount to Uncle Sam.

_______________________

Washington, D.C.: Mr. Salisbury, When you talk about saving 20 percent of total income, do you mean income after taxes or before taxes? Thank you.

Dallas L. Salisbury: I mean before taxes.

_______________________

Herndon, Va.: I plan to retire in about five years, at 62. What I am wondering about is, should I continue to work, perhaps part-time in a different job/location, until I am 65 and then apply for Social Security OR, should I apply for Social Security at 62 and take the loss - I put away 15 percent of my income (saving the max allowable amount in TSP for at least 16 of the last 20 years).

Martha M. Hamilton: We can't predict the future, but if you think you might live into your 90s, I'd go for maximizing Social Security. I believe the turning point on postponing Social Security is that if you expect to draw it for 8 to 10 years into the future, you do better to postpone. I'll turn to Dallas, who knows more, to say whether I've got that right.

Dallas L. Salisbury: I always suggest waiting as long as possible to begin taking SSA as every year you wait means the benefit goes up about 8 percent -- and then that is indexed for life to inflation -- so it continues to be worth more each year. Only if you have a health status or a family history that suggests you will die young, and you are willing to bet on early death, should you begin at 62. If you cannot afford to retire at 62 without SSA, then you cannot afford to retire.

_______________________

Washington, D.C.: Good afternoon! I have a question about 401(k) allocations. I'm 32 and I've been with my employer a year now, so I can sign up for the 401(k) plan. I've heard that you should invest more "aggressively" when you're younger and more "conservatively" when you're older. Where do I fit into that? Any recommendations for how I should allocate the 401(k) pie?

Martha M. Hamilton: You've got at least 30 years ahead of you with your investments, so you can probably afford to be fairly aggressive, investing more heavily in stocks. The most important thing is to get those contributions started now at the highest level you can afford.

_______________________

College Park, Md.: To get a handle on expenses, I have been using Quicken to track everything coming in and going out. It's a bit of a pain, but you can print out a detailed report of your finances. At the end of this year I will have 2 years of data. I plan to do this for the next few years to help me decide when I can afford to retire.

Dallas L. Salisbury: Great! I have data going back to 1988. It does help plan and control.

_______________________

Silver Spring, Md.: Hello, Thank you for picking people turning 30 for your piece. It's refreshing to see retirement information for the non-Boomers out there!

Question: my husband and I save 14 percent of income for retirement. What percent should we save for our daughter's college education?

Dallas L. Salisbury: That all depends on where you plan to have her go to college. Public schools are generally a lot less expensive than private. Check out 529 plans and if you are happy with your state school options see if they have a program that allows you to save and lock in future tuition now. there is good material on 529 plans at http://www.nasd.com/index.htm

_______________________

Arlington, Va.: I don't have kids but plan to have in the future. Should I start contributing now to an education savings account for future college costs?

Martha M. Hamilton: I think I'd opt for retirement savings now and wait till the chicks hatch to begin to save for higher education.

_______________________

Silver Spring, Md.: The ballpark calculator is not very good; can you recommend a better one?

Martha M. Hamilton: I am hoping that readers will let me know what calculators they find to be the most useful and user friendly.

_______________________

Hyattsville, Md.: My company does not have a 401(k). I save in a Roth IRA.. At my old job, I save 20 percent of my income. Now, I'm nowhere near that. Do you have any suggestions for other ways to save for retirement? I've already asked my company to start a 401(k) and they might do that...in the meantime, where is a good place to save money for the far future?

Dallas L. Salisbury: Save the 20 percent or more whether or not you can get favorable tax treatment. You need the money for the future in any case. Also, consider finding a low cost variable annuity if you can lock away the money. But, some come at high cost, so make certain you do careful research if you go this route. My wife and I save at work and save after tax. At least then we know for sure what the tax rate will be. What happens to taxes in the future matters if you "defer taxes", but it does not if you do not.

_______________________

Anonymous: My wife and I are in the 28 percent income tax bracket. Our mortgage will be paid off in several months. We have little or no tax deductions. Most of our retirement savings are in mutual funds. With the extra money in the budget we're considering buying a vacation/second home. Does this make sense or would we be better of putting the money into mutual funds? We plan to retire in about 12 years.

Dallas L. Salisbury: Congratulations! We paid our mortgage off at 50 and all that money now goes directly to savings. Why, because we have not yet reached our target retirement savings. We do the ballpark estimate worksheet once each year, and we still have a ways to go. The mortgage interest deduction just means you are paying a lender instead of uncle sam, so it is still better to be out of debt. And, a second home is a life long expense. Make sure you have done the calculations for savings needed with the those expenses in mind as well. But, if the you can make the numbers work against an assumption of living to 100, go for it, buy that second home!

_______________________

Elkridge, Md.: For people in their 30s with no retirement savings, I'd say it's very important to try to find a job with a defined benefit retirement plan, in addition to a 401(k). A defined benefit plan is much more forgiving of a late start. Unfortunately, defined benefit plans are also dying out quickly, so that probably means looking for a government job.

Martha M. Hamilton: That is an excellent point. So few job hunters in their 20s and 30s even think to ask about retirement benefits (neither to many older job hunters for that matter). And it's a key factor in what your overall compensation is. You need to understand the benefits your prospective employer offers. And those disappearing defined benefit pensions are a wonderful thing. Maybe I'm too optimistic, but I'm hoping as the workforce shrinks and employers have to compete harder for workers, they may come back.

_______________________

New York City (again): But if we sell the house, where will I live? I live with him.

Dallas L. Salisbury: If he goes to a nursing home funded by Medicaid then you are correct, you will need to find a place to live along with a job. Assume you do not do that, you run up large debt and have no job, and he passes. You will still likely have to sell the house to pay off all your debts.

_______________________

Woodbridge, Va.: I've used the calculater at choosetosave.org. It is OK for a one-size-fits-all tool, but I would like to learn more about how to choose a personal financial advisor. I am 49. I have $95k in my federal TSP program, another $85K in an IRA. I contribute 15 percent of my salary to TSP and the government throws in another 5 percent. I also expect to be able to collect a small National Guard Pension at age 60. I know this sounds good but the downside is I only have about 10 years in with the feds and would like to be able to leave federal employment at age 60, pursue part-time or seasonal work in National Parks until age 75 and then fully retire. Making all the moving parts come together seems to require more advice than I can get from an online calculator. Any advice on how to choose an advisor?

Martha M. Hamilton: Thanks for the input on the calculator. Choosing a financial advisor is tough. The Securities and Exchange Commission has a good list of questions to ask an advisor on the investor education part of its website. And the NASD (www.nasd.org), which regulates brokers has good advice too. One issue is whether advisers are really advisers, paid by your fees, or brokers who will earn a commission for selling you something. My colleague Kathleen Day explored these issues in the Sunday Business Section 8/27. _______________________

washingtonpost.com:

Picking the Right Planner by Kathleen Day (Washington Post, Aug. 27)

_______________________

Silver Spring, Md.: I am 27 and have traveled the world, gone to college and graduate school and had an amazing time. I have also managed to save about $30,000 in retirement accounts and about $40,000 towards a house. It can be done, but sometimes sacrifices have to be made. I have had a lot of fun though! And I don't have any student loan debt either. Just make sure to save, and the earlier the better.

Martha M. Hamilton: Hats off to you, especially for being able to focus on the future, but not at the expense of the present. My daughter has been able to travel and save, too. She does it by living amazingly frugally and by being clear on her goals.

_______________________

Maryland: Back in the late 80s the feds switched retirement systems to the current FERS. This action dumped all future employees into the Social Security system. Now twenty years later, these employees are in the Social Security drama. Was this "new" retirement system a "fix" for Social Security in the 80s until these folks get ready to retire? It appears that federal employees got bamboozled and hoodwinked versus the old retirement system benefits. Saving for retirement and college and paying for long-term care insurance, health insurance, life insurance, etc., makes me want to throw my hands up and quit. The harder I swim, tread water and float, the more water I drink. U.S. citizens are drowning.

Dallas L. Salisbury: For what its worth, we are in a lot better position than most other nations in terms of pensions, SSA, etc. Where we fall short is in health care and long term care financing, but those expenses have other nations in bad financial shape. The post '87 federal worker, with FERS, SSA, TSP, etc. and retiree medical if you retire from the feds, is a package that matches the most generous employers in the world. I feel your pain on all the things to save for and pay for. My Quicken helps me do it. The key is the old budget rule (not followed by most folks) spend less than you earn.

_______________________

Bethesda, Md.: I have a dilemma. I purchased a 50-year-old house a couple of years ago. I am debating if I should take out a home equity loan to do some fixing on the house. My rationale (excuse) is that if I need to sell the house in about 5 years when my kid goes to college, the house will be ready for sale. Everywhere I look, the advice is to get rid of debt. In my case if I get the home equity loan, I am acquiring more debt. I can pay the loan, but that means I can't put much money away for savings. I do however, continue 15 percent of my salary contribution to my 401(k). Should I get the home equity loan?

Dallas L. Salisbury: If the "fixing" is needed to maintain the house, versus improve it, then you need to protect your investment. Ideally, find a way to reduce spending to do it. If essential, borrow. An alternative: How many months of reduced 401(k) contributions would pay for the mandatory fix up work? Would you have the discipline to do it? Since most home equity loans are variable rate, could you deal with a spike up in interest rates? If the fixing up is not required, just wanted, then save up for it and then do it.

_______________________

Bethesda, Md.: Dallas and Martha,

Thank you for the ballpark estimate at choosetosave.com and for this article. On the ballpark form, are the estimates are supposed to be yearly or monthly? For wage growth assumption, would that be a guess as to my overall income increase until the age of retirement or my yearly income increase? Where the form asks for expected retirement income, is that supposed to be a yearly or monthly number? Thanks!

Dallas L. Salisbury: please send the email through the choosetosave web site and we will get you the answers.

_______________________

Ballpark estimator: I am also confused by the estimator. It asks how much of my current income I want to retire with. The problem is that I have NO idea. I'm 30 and don't know what I'll need if I do/don't get married, do/don't have kids, what inflation is going to do, etc. Any ideas on how to guesstimate? Thank you!

Dallas L. Salisbury: At ebri.org you will find a September IB that provides a lot of information on what you would need depending. I use 120 percent of final pay if there is doubt. Long life, health expenses, etc. are all uncertain, so I personally do not want a chance of coming up short.

_______________________

Maryland: How can I make even a rough estimate of whether I'm saving enough for retirement? I have $150,000 in investments, a Roth IRA, and and two 401(k)s. I max out my 401(k), and I add another $3,000 to my other investments each year. In total, I'm putting away about $18,000 towards retirement each year, which is 17 percent of my gross income. Is this enough? I don't have any debt other than my house, but I also am afraid of being TOO conservative - I know i have to save, but I don't want to not live in the here and now.

Dallas L. Salisbury: use the ballpark estimate at choosetosave.org

_______________________

Martha M. Hamilton: Folks, I think we've gone a little over our alloted time because you sent so many excellent questions. We'll do this again. Thank you so much for raising great issues.