Its the age-old question: How much should I save for retirement?

For years, financial advisors recommended people save at least $1 million to enjoy a comfortable retirement. But given longer lifespans and concerns about the financial status of Social Security, is that target enough to fund a potentially decades-long retirement?

Maybe not.

Well-off investors surveyed by asset manager Legg Mason in March said that they would need at least $2.5 million to maintain their lifestyles in retirement. And a recent survey by the Employee Benefits Research Institute found more than 1 in 10 workers overall think theyll need to save at least $1.5 million to retire comfortably.

On the other hand, 69 percent in the same EBRI survey thought theyd need to have less than $1 million by retirement--and 1 in 5 thought theyd need to save $250,000 to $499,999. (Even that is more than what many retirees have actually saved. The average retirement savings is about $104,000 for households with members ages 55 to 64 and $148,000 for households with members 65 to 74 years old, according to an analysis by the Government Accountability Office.)



Q: What's the difference between a 401(k) plan and a 403(b) plan?

-- CS, Port Dickinson, NY

A: 401(k) plans are tax-advantaged retirement plans for private-sector workers. 403(b) plans are similar but are primarily for employees of tax-exempt employers such as educational institutions and some nonprofit groups.

With both, employers will often match employee contributions to some degree. If yours does, be sure to grab all the matching funds you can, as that's free money. Employer contributions might take several years to fully vest, but 403(b) plans are more likely to feature immediate or quicker vesting. In both cases, employee contributions are immediately fully vested.

Learn more at fool.com/retirement and 403bwise.com.

Fool's school: Expect volatility in the market

On Aug. 24, the stock market, as represented by the Dow Jones industrial average, plunged by about 1,000 points during the trading day, stunning many investors and setting off a wave of panic. That might seem mighty worrisome, but most investors should not have been hyperventilating.

For starters, we should, at minimum, expect stocks to fall at least 10 percent once a year, 20 percent once every few years, 30 percent or more once or twice a decade, and 50 percent or more once or twice in a lifetime.

Notice that the previous paragraph uses the word "percent." It's important to distinguish between market drops measured in absolute points versus percentage points. The Dow's 1,000-point drop represented 6 percent of its value. Contrast that with 1987's big crash. The Dow fell 508 points that day, but that represented 22 percent of the Dow's value!

With the Dow in the 15,000-to-18,000 range lately, even small moves can look big when measured in absolute points. A 1 percent move, for example, would be 150 to 180 points.

Meanwhile, although a stock-market correction might last years, between 1945 and 2013, corrections averaged just 14 weeks. So go ahead and prepare for the worst, but know that many market crashes are quickly overcome. Indeed, although the Dow fell sharply on Aug. 24, it recovered somewhat during the day and ended down 3.6 percent. The Dow is down

7.8 percent this year after posting gains in each of the past six years.

Those who were right to freak out over the market's plunge were those who had short-term money in it. If you plan to withdraw some money from your stock investments soon or within a few years, perhaps for a down payment on a home or for college tuition, you shouldn't hold it in stocks, as days like Aug. 24 can happen. Short-term money is better off in CDs, money-

market accounts or savings accounts.

When it comes to stocks, expect volatility -- and don't freak out.

Foolish trivia

I trace my roots to a merger of two farming-tractor companies in 1925. During World War II, I provided tractors, motor graders, generator sets and special diesel engines for M4 Sherman tanks. Today, based in Peoria, Ill., I'm a global industrial giant, with annual revenue topping

$50 billion. I'm the premier maker of construction and mining equipment, diesel and natural-gas engines, industrial gas turbines and diesel-electric locomotives. I employ more than 110,000 and helped build the Hoover Dam and other famous dams, the Pennsylvania Turnpike, pipelines, power plants, highways and several World's Fairs. Who

am I?

Last week's trivia question: I trace my roots to an insurance company in Hartford, Conn., in 1850. I entered health insurance in 1899 and auto coverage in 1907. I appointed my first female officer in 1926 and insured the Manhattan Project in 1944. Today, I'm a premier health insurer, serving about 46 million people with offerings that include medical, pharmacy, dental, behavioral health, group life and disability plans, plus Medicaid health-care management services, workers'-compensation administrative services and health-information technology. I'm buying Humana for about $37 billion. My name was inspired by a famous volcano. Who am I?

Answer: Aetna

Got a question for the Fool? Send it in care of this newspaper.



Disappointing returns on stock-market investments are having a chilling effect on the town's retirement system.

Town Councilman Robert Wildrick brought the matter before the Town Council on Thursday, when he urged the town to take action to put the system on a sound financial footing.

The council agreed to have its Finance and Taxation Committee delve into the issue.

The plan's unfunded liability -- the portion where the town falls short of fully covering its obligations -- has zoomed to $78 million, up from $65 million, over the 30-year period upon which the plan is based, Wildrick said.

"This $78 million is money we owe," he said. "While it may be nice to give benefits and all, we have to pay for them."

The town's assumption of a 7.5 percent return on long-term market investments is unrealistic in today's market, Wildrick said. Lowering the assumption would not be painless; the town would have to cover a resulting gap by stepping up annual contributions into the fund.

This year, the actual return looks to be between zero and 2 percent, said Gerry Goldmith, chairman pro tem of the town's Retirement Board of Trustees.

Retirement Plan Administrator Bill Hanes said the town should expect returns to be much lower than 7.5 percent over the next decade.

Hanes said other municipalities and every state in the nation have under-funded their retirement systems, and most are worse off than Palm Beach.

But Hanes said he is concerned about the town's system.

The town pays the pensions through a trust fund at a cost of more than $18 million a year, Hanes said. At the same time, the town's contribution to the fund was about $6.7 million in 2015 and about $7.5 million for the budget year that begins Oct. 1.

"My concern is the negative cash flow," he said. "Over time, the funding is going to erode, so the gap just gets bigger."

The trust fund stands at $207 million, Hanes said.

Mandatory contributions?

Hanes said the town may have to step up mandatory employee contributions into the plan -- a move that could prove to be unpopular with town employees who saw sharp cuts to their benefits in 2012.

The town's system is a hybrid of a defined contribution plan, similar to the 401k used in the private sector, and a defined benefit that is a guaranteed payment. Currently, employees contribute 2.47 percent of their pay into the defined benefit system and a minimum of 4 percent (with a 4 percent match by the town) into the defined contribution portion. The only exception is members of the firefighters' union, who pay 4.82 percent into the defined benefit and 2 percent (with a 2 percent match by the town) into the defined contribution part.

Wildrick said he's concerned about the town's overall financial picture, considering the under-funded retirement plan, and escalating coastal costs and plans to spend $85 million to bury all utilities town-wide.

Thursday's discussion came weeks after council members discussed surveying employee retirement benefit packages paid by other municipalities in the area to see if the town's should be increased so that it is more competitive. The town has faced a rash of early retirements in the last few years after enacting the pension cuts.

But Councilwoman Penny Townsend said that, given the diminishing return on investments, now is not the time to be thinking about boosting benefits.

"I think this is more pressing and supersedes any discussion of the value of our present benefit package," Townsend said.



David Johnson, CEO of Bert Nash Community Mental Health Center, has pushed back his retirement nearly a year.

Johnson, who has held his position for more than 14 years, originally planned to retire Aug. 1, 2016, but because of personal and professional reasons, that date has been moved to July 1, 2017, he said.

As Douglas County continues to gather information on a potential jail expansion and mental health crisis intervention center project, Johnson said, he wants to be a part of that work and help in developing any programs the new facilities might offer.

That, for me, is important, and that will take some time, certainly beyond what I originally intended, he said.

In addition, Johnson said a newborn granddaughter and a recently diagnosed illness in the family has moved his wife into a caregiving position. With that shift, retaining his position as CEO would lessen any potential monetary hardship, he said.

So its also from a financial standpoint, he said. Im going to have to be the breadwinner for a while longer.

Dan Partridge, director of the Lawrence-Douglas County Health Department, said the departments health board has not yet discussed Johnsons new retirement date specifically, but commended his time as CEO.

I do know theres just a lot of respect among health board members for what hes done, Partridge said.

Lawrence Memorial Hospitals longtime CEO, Gene Meyer, also announced his retirement this year. And as Meyers May 2016 retirement date approaches, Johnson said his additional time as Bert Nashs CEO will help ensure an amicable working relationship between his organization and the hospitals new executive.

It will almost be another couple of years, and thats enough time to get stuff done, Johnson said.

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If you think you are going to retire at 65, think again.

Its likely that you arent going to have enough money stashed away to make retirement work out for you. Only two in five people working for large US companies will be ready financially to retire at age 65, according to a study by human resources firm Aon Hewitt.