A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life. ~Suze Orman

I love how girlfriend take care of each other. We share advice and car rides, health and fitness tips and ‘friendly advice.’ We have a great Girlfriend Guru, MIATA EDOGA who shares her ‘women’s wisdom’ on financial situations here on Girlfriendology. Today she’s sharing her girlfriend advice on SAVING FOR RETIREMENT:

A good friend last week told me she’s in the open enrollment period at work. You may have this at your job: they hand you a book chock-full of questions, such as how much life, disability, and health insurance you’d like to purchase, what 401k choices you’d like to make, and my favorite: how much you’d like to save into your retirement plan.

What amount should you pick? What’s the right amount to save?

Most people choose using a method I call “the wrong way.”

They save an amount they can afford. What if this number’s wrong?

• If it’s too high, you’ve saved too much, taking money out of your pocket to spend now.
• If it’s too little, you’re in big trouble and won’t know it until you show up at retirement and don’t have enough to live on.

I’ve often told people that deciding to just throw money into a 401k plan randomly is like driving blindfolded. You’ll certainly move somewhere but there’s a very good chance you won’t like where you end up.

Sometimes I agree with David Chilton, the author of a financial book called The Wealthy Barber. He says budgets are baloney. People do what they have to do to reach their goals.

Don’t you?

When things are going poorly, don’t you find a way to manage? That’s why step number one of determining your retirement savings amount is simple: start with the goal.

Here’s a strategy to figure out how much to save:

1)  Gather the amounts of money you’ve already saved toward retirement.

2)  Decide when you’d like to retire. If it’s a long time from now, pick a reasonable year. You’ll adjust over time anyway; all you’re looking for now is an initial benchmark.

3)  Determine, in today’s dollars, how much you’d like to spend during your golden years.

4)  Experiment with retirement calculators online, such as these ones at Yahoo! or these at MSNMoney. Plug in these numbers above. The calculator will also ask you what return you want on your money. If you’re comfortable with stocks and bonds, using an interest rate such as six or seven percent is a conservative estimate. If you want a guaranteed return, don’t use a rate above three percent.

(This calculator at CNNMoney.com is even simpler: What Do You Need To Save. If you’re comfortable with retirement at age 65 and living on 80 percent of your current income, it’ll quickly spill out an amount you should save.)

You’ll know how much you should save for retirement using these calculators. Now it’s question time: can you afford to put this much away?

If so, save away!

If not, you’ll have to do some prioritizing:

• should you retire on less?
• retire later?
• save into more aggressive funds?

I like this method of saving much better than just picking a “comfortable” number. By knowing the data, you’ll be able to balance short term financial priorities with your long term financial health.

MIATA EDOGA is the President and Founder of Abundance Bound, a 10-year old company committed to utilizing humor, inspiration & lots of love to give individuals around the world the necessary tools to thrive financially, while keeping focus on the things they treasure most. Visit the Abundance Bound Facebook Page for your free copy of Financial Success for the Creative Soul!

What are your secrets for saving enough for retirement girlfriend?

Thanks Miata and thanks for being one of our Girlfriend Gurus! Check out her girlfriend advice on:

• How to Buy a Car without feeling like dirt
• Pay Yourself First
• Financial success
• Saving money on your next getaway/trip
• Credit card advice on paying the minimum payment

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