Abstract :
This paper presents a quantitative approach for estimating retirement numbers and the levels of savings needed to achieve them. The analysis incorporates insights provided by modern financial theory. It is careful to eliminate the "money illusion," i.e., the tendency to assume that future dollars will have the same purchasing power as current dollars, which leads to underestimation of the retirement number. It also includes several factors which, if neglected, can cause significant overestimation of the retirement number.
