Determining how much you'll need to save for retirement isn't a simple exercise.
Many financial commentators have tried to simplify the issue, saying you'll need $1 million in savings or annual retirement income equal to 80 percent of your salary.
But those estimates aren't necessarily helpful. "The rules of thumb that are thrown around out there can do more harm than good," Richard Stumpf, a certified financial planner in Wichita, Kan., told
CNBC.
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He cites one couple he counseled who had embarked on risky investments to reach the $1 million mark. They had overestimated their income needs. "When we ran the numbers, we discovered that they only needed an average 4 percent [earnings] to get to an appropriate number," Stumpf said.
But for another couple, he advised saving enough to provide annual income equal to more than 100 percent of their current earnings.
"Their goal after retirement was to hit the road in an RV [recreational vehicle], which would be more expensive than their current lifestyle," Stumpf said.
So the key is to figure out how much money you'll need for the retirement lifestyle you seek and the safest way to accumulate enough wealth to provide that income.
"You can never save too much," Karin Maloney Stifler, a certified financial planner in Solon, Ohio, told CNBC. "Err on the side of saving more than you think you'll need."
Meanwhile, a plethora of recent studies show that we definitely don't have our financial house in order when it comes to retirement.
A total of 36 percent of adults surveyed by
Bankrate haven't even begun to save for retirement, including more than 25 percent of those aged 50 to 64.
And "many of those that are saving aren't saving all that much." Greg McBride, Bankrate's chief financial analyst, said on the firm's website.
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