How Much is Enough?

Calculate how much money you need to live comfortably through your retirement.

Consider the numbers:

Americans save a median of $380,000 — including home equity and Social Security — for retirement, according to the National Bureau of Economic Research.
Fewer than half of American workers have tried to calculate how much money they'll need for retirement, according to the Employee Benefit Research Institute (EBRI).
Some 9 percent of Baby Boomers predict that they'll never be able to retire, according to American Demographics.

Now retirement planning is taking even more of a hit, thanks to the recent thrashing in the stock market and growing concerns about the cost of medical and long-term care.

In fact, today, fewer Americans are saving for retirement, fewer are sure they'll have enough money to live comfortably after they quit working and fewer have tried to figure out how much money they need to save for retirement, according an EBRI survey.

But you can beat the statistics. The best way: plan for your financial future now.

"Most people don't have a retirement plan in writing," says Jon Miller, CSP, CISP, Vice President of Personal Financial Services at Northern Trust. "Think about how fast the last 10 years flew by. The next 10 will go even faster. The day to start planning for your retirement is today."

Two Ways to Plan:
There are two approaches to retirement planning:

Plan to run your capital to zero, spending your last dime on your last day.
Plan to spend your interest only, leaving your capital to family or charity.

"As people live longer, out-living your savings becomes a stronger possibility," Miller says. "That's why I prefer the interest-only approach. It can ensure that your money lasts as long as you do — even if you live to be 117."

That's the approach we'll focus on in this article. To help get you started in planning your retirement budget, we've provided a retirement worksheet.

Want to explore the spend-down-your-capital method of retirement planning? Check out the interactive calculators in the Resource section.

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Shares of Northern Funds are distributed by Northern Funds Distributors, LLC, not affiliated with Northern Trust. Northern Funds are managed by Northern Trust.