'Will contributing the 401(k) max be enough to retire on?'

@Money May 4, 2012: 3:13 PM ET

(Money Magazine) -- I'm 40 and have more than twice my current salary saved. If I contribute the $17,000 maximum this year to my 401(k) and continue to do the max each year and make catch-up contributions starting at age 50, will I have enough money during retirement? -- Stan A.

The fact that you've squirreled away so much and plan to continue saving at such a prodigious pace certainly suggests that you're on track toward a comfortable retirement.

But despite that optimistic outlook, I can't say -- nor should you assume -- that your future retirement security is a done deal.

Attaining a secure retirement isn't just a matter of having a specific amount tucked away by a given age, saving a certain amount each year or earning a particular rate of return. There's also the issue of how much you'll earn during your career (all else equal, the more you earn, the less of your pre-retirement income Social Security will replace, so the higher percentage of salary you must save); how much of your pre-retirement salary you think you'll need to live comfortably once you retire; and, how big a cushion you want to assure that you don't run out of dough.

It's hard to know how all these factors will play out, especially when retirement is still more than two decades away.

In his book "Your Money Ratios," financial planner Charlie Farrell tries to do just that. He estimates the multiple of salary one should have tucked away in retirement accounts by different ages in order to have a shot at a secure retirement. A 40-year-old, for example, should have about two times their salary already saved. Based on that metric, it would appear you're in good shape.

The problem is, you can't rely on that metric alone. In fact, that twice-salary guideline has a host of other assumptions behind it. One is that you'll continue to save 10% of salary a year until age 45, and then bump it up to 13% annually.

If you're socking away $17,000 a year, you should have no trouble meeting or exceeding that 10%-of-salary savings hurdle, as long as you earn $170,000 a year or less. But if you earn more than that -- or have to save a higher percentage later on, as is the case using Farrell's savings guideline -- you'll have to sock away more than $17,000 to hit the 10% target. That would mean saving outside your 401(k), say, in an IRA or taxable accounts.

Farrell's savings-to-income ratios also assume your retirement investments will grow at a 4.5% annual real rate, or a return of 4.5 percentage points above inflation each year.

For a very long-term estimate, that seems reasonable enough. But it's just an estimate, not a guarantee. Your investments could do better, or worse, depending on how prudently you invest and how the markets fare.

Oh, and the savings figures I've mentioned so far also assume you want to retire at age 65 on 70% of pre-retirement salary. If you want a cushier retirement, you'll need a bigger savings stash and will need to sock away a higher percentage of your income.

To retire at 65 on 80% of salary, for example, Farrell estimates you would need to have 2.4 times salary saved by age 40, plus you would have to save 12% a year until age 45, and then bump it up to 15%.

But there's another reason it's hard to know for sure whether you'll have enough for your future retirement. Even though you may have every intention of saving the 401(k) max every year and doing the full catch-up contribution ($5,500 this year) when you hit 50, forces beyond your control could prevent you from pulling it off.

Just look back to 2008 when a deep recession, massive layoffs and a 50%-plus decline in stock prices disrupted many people's well-laid retirement plans.

So my advice is to use a tool like T. Rowe Price's Retirement Income Calculator and plug in your actual financial information (the actual amount you have saved, how much you earn, how your money is invested). By doing so, you'll get a good sense of the probability you'll be prepared for retirement, assuming you're able to follow through with your savings regimen. If your odds of success aren't as high as you'd like, you can make adjustments, such as saving more, retiring later or investing differently.

Realistically, though, a retirement plan isn't something you can set and then leave on autopilot. So you'll want to repeat this exercise every year or so to assure you're continuing to make progress and, if not, fine-tune your plan. Even after you've retired, you'll want to check in at least annually to make sure that you're not running through your assets too quickly.

At the rate you're going, chances are you'll do just fine. But a lot can happen between now and the time you'll actually retire. Better to tweak your plan along the way if necessary than to assume you're on track and find out late in the game that you've been overconfident all along.

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