Inflation is the wild card to any retirement plan. Before you determine how much you need to save, you must figure out what living is going to cost you 20, 30 or even 40 years from now. while it's impossible to accurately project the cost of every product, Merrill Lynch picked five items and projected their value based on a 4% average annual inflation rate. The results might get you saving.

New Car	Pair of blue jeans	New home
in thousands		in millions
Carribean Cruises	Two Movie Tickets
for two

Source: Personal Finance / Kathy M. Kristof, Los Angeles Times

Save Early, Often and Wisely or Risk Retiring in Poverty

Millions of Americans are worried that they'll outlast their retirement savings and be forced to live their final years in poverty, many recent surveys show. If current savings and investing patterns continue, such fears may well be justified.

But thanks to new rule chages for 401(k) savings plans that go into effect in January, corporate America and the federal government are beginning to act. They're not jumping out of the boat to save you, but they do aim to throw out a life preserver to help you save yourself.

How close are you to drowning? Here are the facts.

Roughly eight out of 10 Americans--some 76 million households--will have less than half the income they need to retire comfortably, according to a study by Arthur D. Little and WEFA Group.

Women have more reason to be worried than men, says a spokesman for Merrill Lynch, which just completed its fifth annual retirement plan study. Women generally save less and start saving later than men, the study says. Because women also live longer than men on average, they're about twice as likely to die poor.

At the root of this bleak picture are several factors.

People underestimate how long they'll live and overestimate how much their company and the government will contribute to their retirement. People also start saving too late, don't save enough and then invest retirement savings poorly, experts say.

"The problem is that retirement is not a concrete thing," says Kathryn Hopkins, executive vice president of Fidelity Investments in Boston. "It is hard to figure out today what you should do to provide for a financial obligation that's sometimes 20 or 30 years away."

Additionally, people save based on how long they think they'll live--and their projections are way off, says a researcher at the Employees Benefit Research Institute in Washington. For example, roughly one out of six individuals who expected to retire early--between the ages of 55 and 64--thought they'd have between one and 10 years of retirement. In fact, their average retirements range between 17.9 years and 24.7 years, EBRI says.

Age 65 We should have started long ago. But it's too late now.		Age 25 We're just starting out. We don't make much money yet.
Age 55 It's not easy to start at our age.		Age 35 Our mortgage and family bills take all of our paychecks. We can't afford to save anything.
	Age 45 We can't save now; the kids are in college

There are always reasons to justify not saving. Unfortunately, many people arrive at the age of 65 without enough savings to provide them with a decent standard of living during their retirement.