Sometimes, when you ask a question that seems relatively tame, you inadvertently step into a minefield. That’s what happened in the second installment of our “Get Your Finances Ready for Retirement” series, when we tried to tackle the matter of “how much money do you need to retire?”

The problem is that there are so many variables in retirement -- beginning with how long are you going to live? (There is no way to know.) Then there is the matter of whether you’ll cut back on your living expenses in retirement or just keep living in the style that you’ve gotten used to. And there is the matter of how much income you can count on from investments and savings (another question mark).

As a result, financial planners are all over the place when it comes to projecting what percentage of your pre-retirement income you need to live comfortably in retirement. On the low end, CPA Jonathan Pond says he figures 65%, based largely on the fact that when you retire, you’ll be able to eliminate many expenses associated with working (commuting, fancy clothes etc.) and live far more simply. But CFP Patty Houlihan strongly disagrees. She told us anything less than 100% is unrealistic -- because if a retiring couple sells their big house, their idea of “downsizing” is usually to buy an equally expensive condo.

The folks at Aon Consulting, working with researchers at Georgia State University, have tried to figure out the answer scientifically. Aon just came out with a new set of Replacement Income Ratios. Those calculate the percentage of pre-retirement income that needs to replaced for an “average” person in different income ranges -- and they come out somewhere between Pond and Houlihan.

But then there’s another school of thought…which holds that trying to project retirement income needs based on one’s pre-retirement income is just…ridiculous. Laurence Kotlikoff, Economics Professor at Boston University, articulates this position on our Memorial Day special program. He says simply using a single number for everyone in a particular income group doesn’t make allowance for their individual differences in consumption -- factors that include whether the prospective retiree has kids in college, is planning to relocate to a low-tax state or any number of different scenarios.

The bottom line is that it’s almost impossible to know how much money you’ll need in retirement. But that doesn’t mean you should shrug your shoulders and not give this any thought (the course taken by most Americans). If you at least have some idea whether your retirement income will come close to meeting your initial retirement expenses, you’ll be able to make a better decision concerning when to retire. And as we’ll point out in Segment #3 (on our Memorial Day program), the age when you retire can make a BIG difference in terms of how much you collect in Social Security payments for the rest of your life. So stay tuned….