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By Christine Benz | 10-18-2010 05:33 PM

How Much Do You Need for Retirement?

Author Laura Dogu believes that one of the biggest retirement mistakes is not carefully calculating how much money you'll need.

Christine Benz: Hi. I'm Christine Benz from Morningstar.com. I'm here at the Bogleheads' Conference, just outside of Philadelphia, and happy to be joined today by Laura Dogu; she is one of the co-authors of the Bogleheads' Guide to Retirement Planning.

Laura, thanks so much for being here.

Laura Dogu: My pleasure. Thank you.

Benz: Well, it's a great event, but I would like to focus a little bit on your book, Laura, there's lots of great information in the book. I'm wondering if you can share with our users some of the key tips that you have and that you impart in the book for people entering retirement or people already in retirement.

Dogu: Well, I think, the key to retirement planning is really to understand how much money you're going to need in retirement. And most people don't really take the time to calculate that number to the best of their ability. Because once you understand how much you are going to need it's easy to plan to figure out, if you've gotten there already and you can retire or whether you have more time and more money that you need to be able to save in order to afford to retire.

With the market the way it's been in the last couple of years, I know a lot of people have been scared about retiring or have been deciding to hold off for a couple of years because the value of their retirement assets has gone down.

Benz: Right. So I know that you coach people on how to work on those calculations. You also talk about withdrawal rates and calculating a livable withdrawal rate, because that's a key part of the process, too.

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