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Retirement security is strictly up to you

Updated: May 3, 2013 12:14PM

Originally posted May 16, 2005

The Savage Number: How Much Money Do You Need to Retire? That’s the title of my new book to be published next month. And given all the scary headlines of recent days, I got the timing right.

How much money do you need? And how can you make it last your lifetime? There are answers to those questions, but they require you to pay attention now -- even if you’re rapidly approaching your retirement. The Savage Truth is you can only count on yourself.

Social Security is running out of money, or at least running out of the surpluses that have been building there, because the government has “borrowed” the money to use for general revenue purposes.

Companies with large pools of retirees, or near-retirees, including those in the steel, airline and auto industries, are reneging or thinking about reneging on pension promises. Many find it easier to go bankrupt, and dump the obligation on the Pension Benefit Guaranty Corp., a federal agency that will pay only a portion of the promised retirement checks.

What went wrong?

If you have a 40l(k) or 403(b) defined-contribution plan, your benefit depends on how much you save and how well your investment choices perform. The stock market crash of 2000-2001 scared a lot of people who thought they’d earn 25 percent a year on their mutual fund investments. They never realized the long-term average return was just over 10 percent.

Your family home has been appreciating at a rapid pace. But haven’t we learned the lessons about markets that perform at above-average returns for several years? At least you can live in your home during retirement, and even withdraw cash through reverse mortgages. But will that be enough?

To get a ballpark estimate of how much you’ll need for retirement, go to a really useful Web site: The American Savings Education Council calculator will give you some great perspective. Then take action.

Save more. It’s ridiculous to debate the creation of personal retirement accounts as part of Social Security when the majority of people don’t even save the allowed amounts in company retirement plans or Individual Retirement Accounts that already exist.

This year you can invest $4,000 in an IRA ($4,500 if you’re over age 50). Have you done that? If you’re worried about stocks, simply set the money aside in a money market account. If you want mutual funds but have to start small, contact U.S. Global Investors at 800-US-FUNDS. They’ll open an IRA mutual fund account for you with $100 if you agree to add at least $30 a month.

If you’re self-employed, set up a Keogh plan or individual 40l(k), which will allow you to set aside even more. Every mutual fund company is geared up to make the process easy.

There’s plenty of expert and inexpensive help available to help you choose investments and monitor them to make sure you’re on track. Every mutual fund Web site has interactive calculators. Financial money management programs like Quicken and Microsoft Money help you track your investments, and plan for goals like retirement or college for your children.

The Internet has become a great source of personalized investment information and advice. is filled with valuable information about funds and stocks, whether you’re a beginner or more sophisticated.

Most useful is Morningstar’s free Portfolio X-Ray service, and a more sophisticated portfolio service for paid members. costs $39 for a trial run, and is the best tool on the Web for giving personalized investment advice, helping you reach your goals. You can securely enter data about your income, goals, and current investments so FinancialEngines can model the impact of increasing your savings, changing investments, or delaying retirement.

Get help

Choose an adviser wisely. Search for a Certified Financial Planner at Find a fee-only financial planner at Check your broker’s regulatory history at Always ask questions about fees, costs and commissions.

Then get going. All the knowledge in the world is useless if you don’t put it into action. Make a plan and stick to it. Have your retirement savings deducted automatically from your paycheck -- before you see the money and spend it! It’s never too late to get started. Odds are we’ll all live longer than we expect. Plan to enjoy it. That’s the Savage Truth.

Terry Savage is a registered investment adviser. Distributed by Creators Syndicate.

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