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For the past couple of years, I’ve answered the question of “how much should I save for retirement?” with “as much as I possibly can”.

But that’s not really a very good answer, although it’s certainly better than what I was doing before. (Nothing.) A better thing to do might be to take an educated guess at how much I might actually need in retirement.

So, I’ll start with the obvious. What do I expect our expenses to be then? At a minimum I imagine they will include health care, long term care insurance, food, water, electricity, property taxes and insurance, household repairs and maintenance. I’d also like to be able to afford internet, telephone, gifts, transportation, travel and entertainment.

Basically the same things we are doing now, with the addition of (most likely) increased health care costs and long term care insurance, and the subtraction of a house payment.

That’s depressing at first glance, because in order for us to maintain the same or better lifestyle, we’ll need at least the same amount of income as we have now (without accounting for inflation.) On the other hand, we won’t be contributing to retirement once we are retired, so that frees up quite a bit of money.

My guess is that we might need 60-70% of what we make now in retirement in order to live our current lifestyle — and less if we get desperate. (Which is a good thing, because right now it’s looking like we’ll only be able to afford a bare-bones retirement.)

Looks like I’ll be continuing with the “save as much as I possibly can” method.

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