Want to terrify yourself, carefree 20-something? Divide 1million by 40 the number of years until retirement and youll see a nice round 25,000. Thats how much, in dollars, youd need to save each year if you were stuffing money under a mattress to save your $1million retirement nest egg. Thankfully, this is not how you save for retirement.

The calculation of I need $1 million dollars by 65, so Ill divide by 40 ... is dramatically off, said Antwone Harris, a certified financial planner with Charles Schwab in the District. Its not accounting for compounding interest or rates of return.

But those compounding interest rates mean one complicated thing: You must invest your savings as soon as possible. Why? According to Ameriprise Financial, waiting even one year can have dramatic effects. If you invest $5,000 every year beginning at age 30 instead of 31, you will have $109,000 in additional savings, assuming an 8percent compounded annual interest rate.

So how much should you invest? What will you need for retirement? And how important is it to start investing every spare penny you make in your 20s? Too many factors go into the calculation to generalize (and theres not enough space here to explain a complex mathematical formula), so we used CNN Money and Charles Schwab Moneywise retirement calculators to get ballpark figures of what you should be saving. Read. Weep. Then invest.

If youre 25

How much will I need to invest each year for retirement?

Low figure: Its assumed that youll need 80 percent of your pre-retirement income when you retire at 65. Lets say you make $50,000 a year. If youre 25 and have no savings, CNN Money says you should be saving $4,550 annually, adjusted for 2.5percent inflation. (This calculator assumes you will be receiving Social Security benefits. More good news: Some experts do not think Social Security will exist in 40years.)

High figure: Charles Schwab MoneyWise Calculator offers a higher figure. If youre 25 and plan to retire at 65 with 80 percent of your pre-retirement income, and expect to receive Social Security benefits, you need to save $6,900 annually.

How much will I need for retirement? CNN Money assumes you will need $1.9million ($572,283 in todays dollars) to retire at 65 years old, with a life expectancy of 85. Charles Schwab estimates you will need $1.8 millionin future dollars.

What should I save each paycheck? If youre paid every two weeks, you should save $175 to $275 each pay period to meet the estimated goal.

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Deal Hunter: Retirement savings shocker

LOS ANGELES--(BUSINESS WIRE)--

American workers, shaken by the realities of the Great Recession, have adjusted their visions of retirement according to the 13th Annual Transamerica Retirement Survey released today by the non-profit Transamerica Center for Retirement Studies (The Center). The Center surveyed more than 3,600 American workers and found that the majority of workers plan to work past age 65 (56 percent) and the majority (54 percent) plan to continue working after they retire. Despite workers demonstrated commitment to saving, just 39 percent believe they are building a sufficient nest egg, thereby underscoring the need to redefine retirement readiness in a way that is better suited to these new realities.

For the past few years, the annual Transamerica Retirement Survey has seen an emerging trend of workers who plan to work past age 65, including some workers who do not plan to retire. This years survey found that these expectations are prevalent to varying degrees among workers of all age ranges, not just older workers.

American workers are adjusting their expectations of retirement, including working past age 65 and planning to work part-time in retirement, said Catherine Collinson, president of the Transamerica Center for Retirement Studies. American workers have reshaped their vision of retirement, now its time to provide an updated roadmap to help them achieve retirement income to last throughout their lifetime.

Following careful analysis, The Transamerica Center for Retirement Studies proposes the following definition of Retirement Readiness:

A state in which an individual is well-prepared for retirement, should it happen as planned or unexpectedly, and can continue generating adequate income to cover living expenses throughout his/her lifetime through retirement savings and investments, employer pension benefits, government benefits, and/or continuing to work in some manner while allowing for leisure time to enjoy life.

Plan for the Best, Prepare for the Unexpected

According to the survey, more than half of workers polled (57 percent) have a retirement strategy, including 12 percent who have a written plan and 45 percent who have a plan that is not written down. Of those with any form of strategy, only 15 percent have factored in contingency plans for retiring sooner than expected and/or savings shortfalls. Meanwhile, among all workers, many still leave their future retirements up to guesswork; when asked how they estimated their savings needs for retirement, 47 percent admitted to guessing.

The effects of the Great Recession have been reflected in workers changing expectations of retirement. Working past age 65 is an important opportunity to continue to earn income, save more, and help to alleviate a retirement savings shortfall; however, its more important than ever for workers to have a retirement strategy including contingency plans if they are forced to retire sooner than expected. The fact that so few workers have a backup plan is a scary reality that must be addressed, said Collinson. Lifes unforeseen circumstances, such as a job loss or health issues, can have a devastating impact on the best laid plans. The what if scenarios are mission critical for American workers of all age ranges to include in their long-term preparations.

A significant majority (84 percent) prefers a do-it-yourself decision-making style regarding saving and investing for retirement, including nearly half (49 percent) of workers who seek advice but make their own final decisions and 35 percent who do their own research and make their own decisions. Despite these decision making styles, most workers (70 percent) agree that they do not know as much as they should about retirement investing.

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Transamerica Study Shows American Workers Shifting Expectations of Retirement, Reveals Need to Redefine ‘Retirement ...

The average American will face a 28% income shortfall in retirement, according to a recent survey by Fidelity Investments. And that's just the broad percentage: In dollars-and-cents terms, Gen Xers will be scrambling to find an extra $1,700 a month to cover living expenses, while baby boomers will fall a whopping $2,100 a month short of what they need to maintain their current standards of living.

That may sound like an insurmountable problem, but don't throw in the towel. As Fidelity's Kathy Murphy says, "finding the money to fill the income gap is not unattainable."

But if you want to do so, "take action now -- and the sooner the better."

Read the story on DailyFinance here

Here are five relatively easy steps you can take -- some as soon as today -- that will help prevent an income deficiency when you do retire.

1. Boost Your Stock Exposure. If you're 40 or younger, adding a higher percentage of stocks to your portfolio with a lower allocation to bonds will allow your portfolio to grow more quickly than if you were in a "safer" allocation focused on a higher bond exposure.

Stocks have historically grown at roughly 10% a year, but even an allocation of 83% stocks and 17% bonds (as Fidelity hypothetically uses) could return 8.4% a year.

Unfortunately, if you're older than 40, a higher allocation to stocks is riskier and -- although it could help your portfolio grow more rapidly -- could have a detrimental effect on your investments if you retire during a bear market.

2. Save More. A Lot More.

Most Americans still don't participate in employer-sponsored retirement plans like 401(k)s. And this is a colossal mistake.

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A 5-Step Plan to Fill That Scary Retirement Income Gap

Not so long ago debt "was a four-letter word when spoken in the same breath as "retirement." Before waltzing into their golden years, older Americans paid off their loans, then celebrated by burning the mortgage.

How things have changed!

Now a third of folks 65 and older have a mortgage vs. 20% two decades ago, according to recent Census data. Median balance: $56,000.

Meanwhile, seniors 65 and up carry an average $10,235 on credit cards, think tank Demos reports.

The affluent are not immune, either. Among households headed by those 65 and up with incomes over $100,000, 25% have nonmortgage liabilities, says the Center for Retirement Research at Boston College.

You don't have to be totally debt-free before your golden years, to be sure. But financial planners caution that too much red ink, and the wrong kinds, can diminish your standard of living.

Make sure IOUs won't weigh you down by taking these steps before retirement:

See how you'd manage. Remember that your income is likely to decline once you leave the workforce.

"You don't want to go into retirement with more obligations than you can honor," says Gail Cunningham of the National Foundation for Credit Counseling.

So use T. Rowe Price's Retirement Income Planner to estimate what you'll get annually from pensions, Social Security, and investments. Then total up the monthly nut on mortgages, car loans, and other installment loans; add on what it would take per month to pay off your credit card in three years and your HELOC in five (you can use CNNMoney's debt-reduction planner to calculate both). Divide the sum by your projected monthly income.

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Don't Let Debt Weigh Down Your Retirement

TORONTO, ONTARIO--(Marketwire -05/16/12)- BMO Financial Group released a study today indicating that many Canadian homeowners are feeling the pinch of balancing mortgage responsibilities with saving for retirement.

The survey, conducted by Leger Marketing, found the following:

"Paying off your mortgage prior to entering retirement is very important, because it will eliminate a significant amount of debt and keep you from having to manage higher debt loads after you stop working," said Tina Di Vito, Head, BMO Retirement Institute. "When you are no longer receiving employment income, it makes it much harder to let go of large amounts of money."

While saving for retirement and paying off a mortgage can often become competing priorities, many experts recommend finding a balance between both but placing extra focus on paying off a mortgage first.

"If your retirement is only a few years away, it is wise to try and pay off your mortgage before you enter retirement," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. "On the other end of the spectrum, for younger Canadians entering homeownership, it's important to consider options that will ensure mortgage debt can be paid down faster and well before their retirement years."

Ms. Parsons added that choosing a shorter amortization and taking advantage of pre-payment privileges where possible is one way to achieve a mortgage-free retirement.

"If you're buying a home at the age of 30, the difference between paying off your mortgage at 55 instead of 60 can have a significant financial impact on your retirement picture," said Ms. Parsons.

Regionally, the survey revealed:

Trying to pay down your mortgage faster? BMO provides the following advice:

Choose a shorter amortization: Choose a mortgage with a shorter amortization, which allows you to build equity in your home. A shorter amortization will help you pay less in total interest, protect against the possibility of rising interest rates and help secure a debt-free retirement.

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Mortgage Debt Hindering Retirement Planning: BMO Study

The new rules for retirement

This isn't your daddy's retirement. And it's not for the faint of heart.

Do-it-yourself 401(k)s, IRAs and multiple-choice Medicare supplement plans have taken the place of the company pension plan, retiree health benefits and a gold watch.

And working into retirement -- in the form of a second (or third) career or part-time job -- is becoming the norm.

"It's a changing landscape," says Sara Rix, a senior strategic policy adviser with AARP.

But this evolution hasn't happened overnight, she says. "Some of the changes we're seeing began 20 to 25 years ago."

One major adjustment: People are working longer. In 1985, there was fewer than 1 in 5 65- to 69-year-olds in the workforce, Rix says. Today, it's almost 1 in 3 -- a 74 percent increase.

Some would-be retirees need the money, says Rix. Others enjoy their jobs and want to keep at it. And, for some, it can be a combination of the two.

Whether you're 25 or 75, you should know these seven things about retirement in the new millennium.

It's like one of those high school math brain-twisters: The amount you save times your compounded earnings, minus any investment losses and factoring for inflation, equals what standard of living at some (movable) future date?

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7 things you must know about the 'new retirement'

DES MOINES, Iowa--(BUSINESS WIRE)--

With the deadline for new retirement plan disclosure regulations just around the corner, 89 percent of financial professionals1 say their plan sponsor clients would value more education about plan fees.

The Principal Financial Group has created a comprehensive online resource to help. Assessing Retirement Plan Value offers tips and tools for understanding and evaluating retirement plan fees, services and overall value.

Financial professionals can use the new resource to help clients comply with a key fiduciary obligation: evaluating whether plan fees are reasonable for the services received.

There is more to assessing retirement plan fees than comparing numbers. The better informed plan sponsors are about the services received for those fees, the better equipped they are to make an effective evaluation, said Greg Burrows, senior vice president of retirement and investor services at The Principal. Financial professionals can use our new online resource to help clients evaluate the overall value of the services the plan is receiving and then assess the reasonableness of the fees paid for those services.

The online resource offers:

The Principal also offers a new Fee Reasonableness Review Checklist, a sample template financial professionals can share with plan fiduciaries to help guide them through the evaluation process.

Weve been delivering the required enhanced disclosures to plan sponsors since last year, said Burrows. We wanted to get ahead of the deadlines so there would be no surprises for financial professionals and plan sponsor clients. This new online hub is one more step in ensuring that plan sponsors understand their plan costs and have what they need to fulfill their fiduciary obligations.

The Principal began delivering a redesigned and streamlined summary of fees to new clients in July and existing clients November 1, 2011. Other features from The Principal include:

The Principal also created an ERISA 404(a) Participant Disclosure Regulation Resource Center to assist plan sponsors in complying with the new participant disclosure regulation,

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New Resource Helps Evaluate Retirement Plan Fees

ST. LOUIS, May 11, 2012 /PRNewswire/ --Some Americans are not optimistic about the possibility of a financially comfortable retirement or the possibility of retirement in general. According to a survey released today by financial services firm Edward Jones, one in 10 Americans say retirement simply isn't an attainable goal when asked to identify the reason they're not saving enough. Only 32 percent of survey respondents identify hard financial issues, such as the need to focus on immediate expenses as the rationale for their lack of savings.

(Logo: http://photos.prnewswire.com/prnh/20110120/MM33708LOGO )

"While everyday expenses like education and housing are clearly necessary expenses for many Americans, this survey found that there is still almost one-third of respondents who point to fairly vague reasons for not saving enough, including those with concerns that saving for retirement is unattainable or that it's too early to start," said Scott Thoma, Investment Policy Committee Member at Edward Jones. "We want to remind Americans that taking a proactive approach, no matter how minimal it may seem, is the best way to overcome retirement readiness fears. Investing regularly into a 401(k) or an IRA can be a great option. By working with a financial professional, any investor, whether they are at the beginning of their career or close to traditional retirement age, can work to develop a plan to help them achieve their goals."

Conducted by Opinion Research Corporation, the survey of 565 respondents found that age plays a factor in whether Americans are saving enough. Seventy-two percent of respondents between 18 and 34 believe they are not putting enough money towards retirement. The percentages dropped with the age of the respondents, with just less than half of respondents (47 percent) 65 and older indicating they are not saving enough.

The survey also found that household and family size has a clear impact on retirement savings. While the survey average shows that 32 percent of Americans are grappling with too many current expenses to save for retirement, the percentage increases dramatically for respondents with children between 13 and 17 to 49 percent. "Balancing college and retirement savings is a common challenge for parents. With limited resources, it's important to create a strategy that will help allocate savings appropriately," Thoma continued. For respondents with no children, only 25 percent indicate that current expenses are impacting their ability to save.

Other key findings from the survey include:

About Edward JonesEdward Jones provides financial services for individual investors in the United States and, through its affiliate, in Canada. Every aspect of the firm's business, from the types of investment options offered to the location of branch offices, is designed to cater to individual investors in the communities in which they live and work. The firm's 12,000-plus financial advisors work directly with nearly 7 million clients to understand their personal goals - from college savings to retirement - and create long-term investment solutions that emphasize a well-balanced portfolio and a buy-and-hold strategy. Edward Jones embraces the importance of building long-term, face-to-face relationships with clients, helping them to understand and make sense of the investment solutions available today.

Edward Jones, which ranked No. 11 on FORTUNE magazine's "100 Best Companies to Work For 2011," is headquartered in St. Louis. The Edward Jones Web site is located at http://www.edwardjones.com, and its recruiting Web site is http://www.careers.edwardjones.com. Member SIPC.

Survey was based on 565 telephone interviews of U.S. adults conducted between April 5 7, 2012. The margin of error was +/-5 percent.

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US Investors Admit They Are Not Saving Enough for Retirement

Retirement planning isn't easy. Nearly half of Americans don't feel financially prepared to live to age 75, according to a survey from Northwestern Mutual. But the process is a lot less burdensome if you break the task down into simpler parts. Here are seven questions to ask as you plan for your long-term financial security in retirement.

- Mark Trumbull,Staff writer

At the core of the typical retirement plan is the goal of building assets that will provide income, alongside Social Security and other sources, during your senior years. But how much do you need to save by age 65 or 70? And what does that mean for your present saving habits? The math gets complicated fast, because there are so many variables. How much to save depends on things like your future wage growth, inflation, longevity, future spending needs, what year you hope to retire, and whether you have a defined pension in addition to Social Security. Many families will find it helpful to consult a financial planner who is paid by client fees (not paid by a financial company to promote certain products). A planner would help with setting a savings target and with other steps in retirement planning. But online calculators can also offer some useful guidance. One free tool that blends ease-of-use with relatively sophisticated results is T. Rowe Price's retirement income calculator. Answer a few questions, and soon you'll see a chart of how much you're on track to save now, and how much you might need to boost that amount to have a 70 percent chance of hitting a prudent target by retirement. The tool lets you test what happens when you shift a few parameters (like retirement age). An alternative online tool, worth noting because it's considered state-of-the-art by some finance experts, crunches the numbers to fit a theory called "consumption smoothing." This is the idea that your goal is to maximize your quality of life (the "consumption" part) over your whole lifetime (the "smoothing" part).

The service, called Economic Security Planner, often gives very different advice from the typical online calculator. And it can be tailored specifically to one's situation such as factoring in when you'll stop helping a child through college and start putting some extra money toward your own retirement. The software concept was crafted by financial economist Laurence Kotlikoff of Boston University. Whether you turn to a professional or to some software designed by professionals for guidance, don't be frozen by the complexity of the decisions. Doing something is much better in this arena than doing nothing, finance experts say. So set a goal, keep saving, and you can revise or improve your plans as you go.

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Retirement planning 101: Seven questions you need to answer

Graduation is a proud day for parents and students, but saving for a child s college education shouldn t take precedence over saving for retirement.

CHICAGO -- Imagine if retirement were financed by scholarships, grants and loans.

You could qualify for a substantial aid package to pay for your senior years. Your stellar job "grades" and career achievements would be rewarded with significant merit aid.

Alas, no such aid exists. Paying for retirement is an expensive obligation that you have to handle on your own.

The one similarity with college is you likely will need to set aside money for many years in order to take care of it.

And if you need to save for your children's college as well as your own retirement, you've got a daunting challenge on your hands.

The cost of a college education continues to rise faster than inflation, at roughly 5 percent per year. The average sticker-price for four years at a private college is now more than $150,000 -- including $38,589 for the 2011-12 school year. Even going to your state's university runs close to half that total at an average $17,131 a year, according to the College Board.

Retirement is far more expensive than that.

How do you balance those important objectives? Here are some considerations to keep top-of-mind as you juggle both:

Put retirement first: Student loan debt has risen above $1 trillion and the average student's debt at graduation now exceeds $25,000, according to the Project on Student Debt. Hoping to keep their own kids from being overly burdened, parents often unwisely sink thousands of dollars into their

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Retirement savings should come before college funds