What will you need in retirement? Enough money to last a remaining lifetime, gracious living, travel, educational challenges, helping family and community.

What is the definition of a satisfactory lifestyle? It is almost always elusive because simple or elegant is in the mind of the beholder. Sufficient to say that by the time that most people are ready to think about the meaningful second 50 percent of their lives, they have a pretty good idea of what they want out of their existence, know what to expect and view this time as an opportunity or second chance to do what they want. Do you ever think about how many years after official retirement you will live? It could be much longer than you think, given your family history, your health, your individual habits, and genetics ? the longevity gene.

In Thursday?s Wall Street Journal, a questionnaire asked just that question to thousands of clients turned up some incredibly interesting results. Only 16 percent of participants correctly answered these two questions. At age 65, how much longer will you live? Answer 50 percent odds of living to age 85 or older. If you are married, what are the chances of one spouse living to age 97? Answer 25 percent odds of living to 97.

If you want to find out how old you?ll be, go to:

All this talk about living a long time, along with what the costs may be, generally provokes real money anxiety in many of us, especially those who came from families who struggled with finances most of their lives. You can figure out where you will end up on an estimated basis, and then apply it to your overall financial picture. Before even talking about what you have saved, and what you expect to save, you have to focus on expenses and income. Both are affected by inflation, expenses more so, and have a compound effect on your nest egg.

For those not comfortable with an excel spread sheet, sharpen your pencil. Get out an ordinary calculator and ruled sheets of paper. You will need to draw columns to represent each year you want to project out, i.e. 2006, 2007, 2008, 2009, and so on. You may want to buy accountant ledger paper already columned up. Let?s say that you want to retire from your full-time job in 2006.

First you will need to separately calculate your annual expenses and apply them against all annual income earned, pensions, rents, etc. coming in during retirement, starting with retirement year. ? what is the overall expense of your lifestyle on an annual basis? Start with the basics. What does it cost to run your household now, utilities, cable, maintenance, rent/mortgage payments? Use that number. What type of health insurance do you have? Plug that in. Also transportation, ordinary spending money/entertainment, clothes and personal care, condo fees, list all the recurring items, don?t forget food. Let?s say that for two people that average overall annual expense this year is $50,000.

This may seem more or less reasonable to you, but we need a plausible number to project a simple lifestyle.

Add gracious living to the mix. What are the big ticket items, that you want to make, do, experience, have? Make a separate list of those and the year that you want them to happen. You may want to travel extensively in 2006, 2007, 2008, then decrease that to just the occasional off-Island shopping trip. Let?s say that number is $15,000 per event. You may also need to replace your car, say in 2010 ? second hand $14,000.

Add up all expected income ? pension income, annuities, rental income if you have it, superannuation ? leave out the contributory pension for now. If you are less than 65, you aren?t going to collect it for a while anyway. Do not count interest and dividend income because that will be calculated against your total beginning capital.

Now take that total income number, annually, and subtract it from your annual expenses. What have you got? In many cases, you will have a negative number. This is the amount that you will need to drawdown from your capital each and every year, projecting for inflation along the way.

Negative numbers are a bit scary. You will correctly surmise that starting retirement in a deficit position may not be such a great idea. Now is the time to think about lining up a part-time job for retirement doing something that you really like, before you retire. The longer you can stave off drawing capital, the better off you will be.

Doing this General Net Income Exercise will also give you a good indication of what you really need to make up the retirement income difference.

As you near retirement, these rules will come into play:

4 Make retirement your absolute top priority, it is more important than funding your children?s education, more important than trips

Don?t give extra money away, don?t loan money

Add to your life expectancy, because you are going to be around

Plan on expenses costing what they cost now

Try to work part-time in an area you like for as long as you can once retired.

But what about the special goals and travel, you say?

Stay tuned next week for the final charts of estimating how long your money will last based against what you have saved so far.

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