Make us your home page

Retirement more expensive than you might think

Investing for a Lifetime by Richard Marston says smart investing can be simple but requires careful planning.

New York Times

Investing for a Lifetime by Richard Marston says smart investing can be simple but requires careful planning.

Two things make Investing for a Lifetime (Wiley & Sons) worth your attention.

First is the simple, straightforward approach the author, Richard C. Marston, a finance professor at the University of Pennsylvania, uses to explain how you should invest to ensure that your money lasts as long as you do.

He reduces everything to the three steps that you might have suspected: Save a lot, invest your money wisely and don't withdraw the funds too soon.

"I believe investing is relatively easy," he writes. "It is much harder to save than invest."

That brings us to the second thing to like about the book. Most of it is devoted to helping you determine exactly how much money you need to put away. His answer: a great deal.

Fidelity Investments garnered a lot of attention two years ago when it declared that you would need eight times your current salary to "meet basic income needs in retirement," but Marston disagrees. "Despite the fact that it is very difficult to save eight times your income, the goal the company proposed seemed too low to me," he says.

If you thought eight times your current income is daunting, Marston's default position will stun you. He says it can easily come to 15 times what you are earning now.

He calculates that someone making $100,000 annually, saving $15,000 a year for retirement and qualifying for almost the maximum amount paid by Social Security would need about $59,000 a year in retirement. So where will it come from? Unless you have a pension or some other stream of income once you stop work, the answer is your retirement funds.

So the person making $100,000 will need a retirement portfolio of $1.475 million to be able to withdraw $59,000 a year. That works out to be a savings goal of 14.8 times current income, not eight.

Retirement more expensive than you might think 08/03/14 [Last modified: Sunday, August 3, 2014 7:48pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, New York Times.

Join the discussion: Click to view comments, add yours

  1. At Menorah Manor, planning paid off during Irma

    Nursing Homes

    ST. PETERSBURG — Doris Rosenblatt and her husband, Frank, have lived in Florida all of their lives, so they know about hurricanes.

    Raisa Collins, 9, far left, works on a craft project as Certified Nursing Assistant Shuntal Anthony holds Cassidy Merrill, 1, while pouring glue for Quanniyah Brownlee, 9, right, at Menorah Manor in St. Petersburg on Sept. 15. To help keep its patients safe during Hurricane Irma, Menorah Manor allowed employees to shelter their families and pets at the nursing home and also offered daycare through the week. The facility was able to accommodate and feed everyone who weathered the storm there. [LARA CERRI   |   Times]
  2. After Irma, nursing homes scramble to meet a hard deadline

    State Roundup

    TALLAHASSEE — Florida's nursing homes and assisted-living facilities find themselves in an unfamiliar place this week — pushing back against Gov. Rick Scott's administration over new rules that require them to purchase generator capacity by Nov. 15 to keep their residents safe and comfortable in a power …

    In this Sept. 13 photo, a woman is transported from The Rehabilitation Center at Hollywood Hills as patients are evacuated after a loss of air conditioning due to Hurricane Irma in Hollywood. Nine have died and patients had to be moved out of the facility, many of them on stretchers or in wheelchairs. Authorities have launched a criminal investigation to figure out what went wrong and who, if anyone, was to blame. [Amy Beth Bennett | South Florida Sun-Sentinel via AP]
  3. Trigaux: How Moffitt Cancer's M2Gen startup won $75 million from Hearst


    TAMPA — A Moffitt Cancer Center spin-off that's building a massive genetic data base of individual patient cancer information just caught the attention of a deep-pocketed health care investor.

    Richard P. Malloch is the president of Hearst Business Media, which is announcing a $75 million investment in M2Gen, the for-profit cancer informatics unit spun off by Tampa's Moffitt Cancer Center. Malloch's job is to find innovative investments for the Hearst family fortune. A substantial amount has been invested in health care, financial and the transportation and logistics industries.
  4. Three-hour police standoff ends, thanks to a cigarette


    TAMPA — A man threatening to harm himself was arrested by Tampa police on Tuesday after a three-hour standoff.

  5. Another Hollywood nursing home resident dies. It's the 9th in post-Irma tragedy.

    State Roundup

    The Broward County Medical Examiner's office is investigating another death of a resident of the Rehabilitation Center at Hollywood Hills — the ninth blamed on the failure of a cooling system that became a stifling deathtrap three days after Irma hit.

    Carlos Canal, pictured at 47 years old, came to Miami from Cuba in 1960. Above is his citizenship photo. [Courtesy of Lily Schwartz]