Reassessing Retirement in Hard Times

How much money will you need to live comfortably in retirement?

One way to calculate the answer is the old income-replacement rule of thumb-to retire comfortably, you must replace 80 percent of your annual pre-retirement income. But at best, this is a rough estimate. For example, it doesn't take into account unforeseen spending needs such as higher health care expenses or a long-term care insurance policy.

At the same time, the rule doesn't recognize that some expenses might fall or disappear entirely, such as commuting or maintaining a business wardrobe.

But most important, the income replacement method is wrong for our current hard times economy, because it puts all the focus on wealth accumulation. It doesn't begin with the correct questions: What is the lifestyle I want? How much will I need to spend on basics? What can I afford to spend?

Read the full story at RetirementRevised.com.