It's a perennial question: "How much do I need to save for retirement?"

It's a perennial question: "How much do I need to save for retirement?"

The answer comes wrapped in a challenge few consider: How do you want to live after you call it a career?

Christine Fahlund, senior financial planner at T. Rowe Price (TROW) in Baltimore, says individuals should save at least 15% of their pretax salary for investments to replace about 50% of their inflation-adjusted salary in retirement.

"Make it a process," she says. "We don't have any numbers saying you need to set aside $X for retirement. Instead, we say if you save X% of your salary now, you'll be able to replace Y% of your salary in retirement."

For example, if you are 30 years from putting your feet up, and if you've saved three times your current pretax salary and are now saving 15% of your salary each year, you may be able to replace 75% of your preretirement salary in retirement. But if you've got 20 years before retiring, if you've saved just your annual salary and if you're currently saving only 5% of your current pretax salary, it looks as if you'll be able to replace about 16% of your current salary in retirement.

T. Rowe Price used a computer analysis to develop projections based on thousands of possible market outcomes in the future. Note that the market scenarios are potential--not historical.

The model portfolio is based on 60% stocks and 40% bonds before retirement and shifts to a more conservative mix of 40% stocks and 60% bonds after retirement. It assumes annualized returns of 10% for stocks, 6.5% for bonds and 4.75% for short-term bonds. Annual expense of 1.09% is assumed for stocks, 0.72% for bonds and 0.61% for short-term bonds.

The key to successful retirement savings is to develop a plan early and stick to it.

"Many people tell me that they're not counting on Social Security," says Fahlund. "But they're also not saving for retirement because they say they have other priorities."

The demographic wave of baby boomers is about to wash over the Social Security system and sweep it away in its present form.

President George W. Bush has proposed allowing younger workers to set aside as much as four percentage points of the current 6.2% Social Security tax in private accounts--similar to the Thrift Savings Plan now available to federal workers. Participation in the program would be voluntary and wouldn't affect those now aged 55 or above.

From 2001 to 2030, federal revenue as a percentage of gross domestic product will hold about steady while expenditures for Social Security, Medicare and Medicaid will nearly double. To cover the increased cost with taxes alone, the combined Social Security and Medicaid tax would increase to 30% from 15.3%. If taxes aren't increased or if other adjustments aren't made, federal programs for the elderly will consume about 66% of federal revenue, analysts say.

Social Security now collects more in taxes than it disburses in benefits. The current pay-as-you-go scheme is likely to remain solvent until 2042 or 2052, depending on the projections used. But critics say if changes aren't made now, benefits will be slashed by at least 30% in the future.

"Based on the data, something has to change," Fahlund says. "There are many different solutions, and for now, I think it's not a question of which solution, but that we address the problem."

For starters, that means drafting an individual retirement savings plan and sticking with it.