Ask the experts

How do you save for retirement while still enjoying life? I don't want to end up with a bunch of retirement money but a very boring life, or conversely, no retirement savings and an exciting life. --Nicole Nelson, New Brighton, Minn.

First off, I don't think it's always an either/or proposition. I know a lot of people who, throughout their careers and in retirement, manage to enjoy life even if they don't have as much to spend as they would like.

That said, I agree with you that striking a balance between consumption today vs. spending tomorrow is one of the hardest things about managing your money. The way Money and, indeed, most financial advisers suggest you deal with this issue is to set a target level of retirement income -- say, 80% or 90% of your pre-retirement salary -- and save enough so that withdrawals from your eventual nest egg plus Social Security and pensions get you the income you'll need.

To find out how much that is, check out the What You Need to Save calculator. Enter your age, salary, and savings, and you'll get an estimate of how much you must sock away to retire at 65 with 80% of pre-retirement income.

You should know, though, that some economists have a problem with this approach. They say setting a target like this to maintain your lifestyle in retirement could lead you to save too much, resulting in cutting your living standard too much now to live better later on.

Who's right? That's hard to say because there are so many unknowables: for instance, stock market performance, the trajectory of your career, and future tax rates. Given such uncertainties, the best you can do is estimate a reasonable level of regular saving and just try to stick to it. Then monitor your progress and make necessary adjustments, particularly as retirement nears. Certainly when you're within 10 years or so of calling it a career, you should have a much clearer idea of the actual expenses you'll incur in retirement. --Walter Updegrave

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