As I have read other personal finance blogs, there is often a discussion about what the "experts" feel a person needs to save to have a secure retirement. I'm not going to link to the specific articles referenced, it's easy enough to find some out there. (Actually I will reference one that is very interesting: http://www.pbs.org/wgbh/pages/frontline/retirement/view/) Anyway, as I had some time I was trying to see how I measured up against these metrics. And what I determined is that, for me, this isn't as easy to determine as you might think.

The reason for this is multi-faceted. First let me say I usually read that experts refer to what you need for retirement in one of two ways. Either you need to save a certain amount each year (usually they say in the 15-18% range) for 20-30 years, or you need a certain amount when you retire (I've read everything from $500K to $2Million - I guess it depends on when you retire).

Since my retirement time frame is about 25 years out, I prefer to look at the amount I save annually and see how I am doing compared to the benchmark. In its simplest form, I am saving 10% (my 10% + 0% match) into my 457 plan (a gov't 401(k) plan). So at first glance it looks like I am not saving enough.

But I have a pension at my current employer (I still have two years before I vest in the plan, but I think its worth considering the numbers). I have to contribute 5% to the plan (this is refundable to me should I leave this job), and my employer contributes a varying amount to fully fund it. Currently it is contributing about 7% (next year should be upped to about 9%). Now I know this money isn't mine per-se but will be used to make a guaranteed payout. Still..., to figure out what I am saving towards retirement, I think these are good numbers to use. OK, that brings my total up to 22% (all of it with pre-tax dollars).

"But wait, there's more..."

However, there is also the fact I am paying a mortgage. Now I am not going to get into what the value of the house has done (it's gone up, up, up) or will do (prolly flat line), thats not important for this discussion. What is important though is that in each payment a certain amount goes to pay down the principle borrowed. Since the more that goes toward the principle, the more I would get when I sell the house, I think I should be able to consider this as money towards retirement. (To see why, consider that if I was renting, I would not be getting anything for the money paid when I stop renting, so it does help my net worth, just like any retirement account does.) Now each month I pay a varying amount towards principle, but it is currently paying down the principle at about 17% of my gross pay (that is, I'm paying with post-tax dollars). If I add this amount to the previous amount, that comes to 39% saving. (I could add the tax savings of the interest paid, but that probably is only a net of 1%, so I will ignore this factor)

"And if you call today..."

I am curently paying my wife monthly as part of a divorce settlement (yucky story). This will be completely paid off as of October of this year (yahoo!). Anyway, this amount is also post-tax money, at about 18%. As this money is in effect going towards her part of the estate (that is, increasing my worth by buying her out), this money should be considered as contributions to savings as well. Also, once the payments are done, this money *will* go towards higher savings in other areas. Add this to the prior amounts, and I come up with 57%.

"And if you call in the next fifteen minutes..."

One last thing. I have started trying these 0% Bank Transfers using credit card offers. Currently the money from these is earning me another 1% (that is: an amount equivalent to 1% of my monthly salary), and have another one in the pipeline that will give me another 1% if it goes through. Adding that higher amount in, I now come up with 59%. And this isn't even considering Social Security (trying to add that in will only muddy an already cloudy calculation!).

So, what am I saving towards retirement? 10%, 15%, 22%, 39%, 57%, 58%, 59%, something else??? Personally I think it should be 59%, as all the amounts really do contribute to net worth.

Egads, looking at that number is really astonishing. If I kept up this rate, and had the mortgage and divorce done with, I would be truly putting over half my pay into savings. Somehow I don't think I can keep this up forever (other than the BTs, I have been doing this saving rate for about the past year), but hopefully if I can do it for a few years, I will have set myself up so that even if my savings rate drops significantly, there should be enough to grow to a decent nest egg waiting for me when I retire.