Reply to Retirement Saving Benchmarks

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[quote=Anonymous][quote=Anonymous]An advisor is not going to tell you this either..

[/quote]

[b]An advisor absolutely will tell you whether you are on track!  [/b]

You need to make sure to go to an RIA (financial and investment advice) that has a CFP, not a Broker-Dealer (investment advice).  But you said you don't want to hire an advisor, so here is how to do it yourself:

Purchase "Kaplan Schweser Review for the CFP Exam, Understanding Your Financial Calculator" and navigate to the section on Retirement Needs Analysis (In the 4th edition, this is page 90).  Follow the instructions to calculate your retirement needs.  The general approach is:

"
1. Determine the amount of annual income needed during retirement in today's dollars.
2. Determine the amount of annual income needed in the first period of retirement by inflating the amount calculated in Step 1 by the expected inflation rate.
3. Determine the amount of funds that must be accumulated at retirement. This is done by finding the Present Value (PV) of an annuity (annuity due) of the amount calculated in Step 2 using an inflation-adjusted discount rate.  The term of the annuity will be determined by the number of years from retirement to life expectancy.
4. Determine the annual amount of savings required to accumulate the necessary funds for retirement.
"

This is how we (advisors) calculate whether you are on track.  There are a few assumptions embedded in this that require some discussion of family history, health, cost of living, and plans for retirement (location and standard of living) that advisors will work through with you.

Greg Caramanica, CFP[/quote]

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