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The New Savage Number: How Much Money Do You Really Need to Retire? by Terry Savage

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CONCLUSION

Those are the Savage Numbers. They take you from starting your first job to midlife crisis through the reading of your will. You can plan ahead if you refuse to be intimidated by the unknown.

You can know with reasonable certainty how much you need to save for the retirement you want and how much you'll need to continue earning in retirement to supplement those savings. You can know with reasonable certainty how to invest your savings—ranging from immediate lifetime annuities to income funds to conservative and aggressive stock funds. And you can know with reasonable certainty how much you can withdraw every year without running out of money in your lifetime.

Notice the words reasonable certainty. That's not the kind of absolute certainty you'd need to convict someone of a crime. But it is far better than the guesswork you get from pencil-and-paper calculations or even from the myriad of online calculators at financial services web sites. This reasonable certainty derives from projections that are based on historic data, with the same modeling techniques statisticians and scientists use to do everything from sending a spaceship to Mars to decoding the human genome. The calculations are not always perfect, but they're far better than closing your eyes and making a wish.

These calculations are not disrupted by market crashes or economic crises—if you believe in the future. Extreme and extraordinary events such as a financial collapse cannot be predicted—but the possibility ...

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