Retirement Roulette

HOW MUCH MONEY WILL IT TAKE TO RETIRE? THE figure you hear the most often is a nice, round $1 million, and it probably depresses you. Most people will never acquire such a luxurious account. If it makes you feel any better, $1 million 20 years from now is ""only'' $550,000 in current dollars--but that might also sound like a figure from la-la land.

Luckily, you won't need that much in savings, unless you're feeding country-club tastes. Just ask the retirees you see around you. They're sitting comfortably in the middle class on savings of considerably less. Your life shouldn't be very different from that.

So where does this famous $1 million estimate come from? To find out, the reporter for this column, Temma Ehrenfeld, 36, put her finances on the line. She called firms that advertise retirement planning and asked them for help. She didn't disclose that she was working on a story, but went to appointments armed with her real-life personal finances: salary, vested NEWSWEEK pension, 401(k) plan and the savings outside her 401(k). The advisers ran her data through their computer programs. Bottom line, she asked for the answer to a single question: ""How much should I save to be sure I'm going to be OK?''

Slot machines: The results show an industry whose computers might as well be slot machines. She got wildly different and apparently random answers, based on assumptions that weren't always relevant to her life. One adviser told her she had to save an extra 30 percent of her salary. Others concluded that she's already saving enough. Their estimates of how much she needed ran as high as $1.5 million. These computers ought to be recalled. They're a hazard to our mental health.

Temma did discover why some planners say you need $1 million. They assume that you're financing your retirement solely out of personal savings, with zero income from Social Security or employee benefits. To me, that's irresponsible planning. Fashionable thinkers pretend that Social Security won't pay--but it will, as the current debate in Washington makes clear. As for employee benefits, what's vested is yours. It won't go away.

You might want to test a retirement projection with and without future employer contributions, just in case you're fired tomorrow. But most of the ""experts'' Temma saw dismissed her benefits out of hand. That had the handy side effect of requiring her to save extra money, which the experts would be happy to manage for her.