Many do not know how
much retirement
will cost

National Retirement Planning Week is sponsored by the National Retirement Planning Coalition, a group of financial industry organizations whose goal is to educate people on the issues related to retirement planning. And it appears that most people could benefit from this type of education. In fact, the evidence suggests that most of us aren't saving enough for retirement -- and we don't even know how much we should save. Consider the following:

» The U.S. personal savings rate, as a percentage of disposable personal income, was just 2.1 percent in 2003, according to the U.S. Department of Commerce. Two decades earlier, in 1984, this rate was 10.8 percent.

» Only about four in 10 workers have calculated how much they'll need to save to live comfortably in retirement, according to the 2004 Retirement Confidence Survey, published by the Employee Benefit Research Institute.

These statistics are telling a pretty scary story. What can you do to make sure it isn't your story? Take the following steps:

» Envision your retirement lifestyle: When you think of "retirement," what images come to your mind? Will you travel the world? Open a small business or do some consulting work? Devote your time to charitable activities? The first step toward achieving your ideal retirement is to envision it.

» Put a "price tag" on your retirement: Once you know what you want to do during your retirement, you need to calculate, at least in broad terms, how much it will cost. Specifically, you'll want to know about how much money you'll need at the time you retire, how much income you might have during retirement, and how much you'll need to withdraw each year from your various retirement plans. These calculations can be complex, so you may want to work with a financial professional.

» "Ratchet up" your retirement savings: Look at your current retirement savings vehicles. Are you contributing the maximum amounts to your traditional or Roth IRA and your 401(k)? If you can't afford to "max out" these plans, put in as much as you can. So, for example, whenever you get a raise in salary, increase the amount you put in to your 401(k); if you get a bonus, a tax refund or another "windfall," put part of it into your IRA.

» Invest for growth opportunity: If you're going to achieve your retirement goals, your money has to have the opportunity for growth. Consequently, you will need to devote a considerable part of your portfolio to stocks. Historically, stocks have outperformed all other asset classes -- bonds, government securities, certificates of deposit, etc. Of course, it's true that stock prices will fluctuate in the short term. But you can reduce your investment risk by purchasing quality stocks, holding them for the long term, and combining them with other investments in a diversified portfolio. Please remember that past performance does not assure future results and stocks are subject to market risk.

If you want to make progress toward your retirement goals, use National Retirement Planning Week as a starting point -- but don't let it be the end. Keep planning, saving and investing all year round.