ARE YOU SAVING TOO MUCH FOR RETIREMENT?

Are Americans struggling to save more for their retirement than they may need to? Yes, argued Kenn Tacchino and Cynthia Saltzman, associate professors at Widener University, Chester, Pa., addressing members of the Institute of Certified Financial Planners. The problem is that accumulation models, which are intended to estimate the amount of money a person needs to save for retirement in order to maintain a projected income stream, "are overstating the financial resources needed for retirement. Accumulation models can and should paint a more accurate picture of the amount to save for retirement."

Tacchino and Saltzman are quick to point out their findings should not suggest that consumers are "off the hook" when it comes to saving for retirement, or that the financial services industry has zealously encouraged consumers to oversave. Nevertheless, they think that accumulation models typically overstate the financial resources needed for retirement, and, consequently, some consumers "become apathetic to start saving for retirement because it appears too daunting a task."

Retirement accumulation models--everything from worksheets to software programs--typically determine how much the retiree will require in income each month to live a desired lifestyle. The models factor in financial resources available to help pay for it--Social Security, pensions, etc.--then determine how much the person will...