Over on rebecca's pocket [rebeccablood.net], I saw a link to a New York Times article called A Contrarian View: Save Less and Still Retire With Enough [nytimes.com]. The premise of the article is completely ridiculous (which, I guess, is why it is so interesting).
The basic jist of the article is that financial advisors are way over-estimating the amount that people have to save for retirement, and that you could get better use out of your money if you're saving too much:
The dispute revolves around how financial planners determine how much a person should save...Alright, that does sound like an impossible amount of money to save (although a huge chunk of that probably will be in real estate). But if anything, I think that the average person is on the opposite extreme. Most of the people I have talked to about retirement planning haven't really put that much thought into it. And when you look at the cost of retirement homes and care facilities, I can't imagine how we're going to be able to afford anything like that 30 years from now.
The starting point for most retirement plans is the so-called replacement rate. It says an American needs an annual income in retirement equal to 75 percent to 86 percent of what he or she earned in the final year of employment...
Coupling that with a second industry rule of thumb that says retirees should spend no more than about 4 percent of their assets each year to make them last, a typical couple with that level of income should enter retirement with at least $2.1 million in assets, including 401(k)s, I.R.A.’s, stocks and bonds, real estate, cash value life insurance, pensions and Social Security benefits."
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