A not uncommon question, when you're taking personal finance, is, "What percentage of your income are you saving for retirement?"

My knee-jerk response is usually to say, "15%," because i know that's what i'm contributing to my 401(k). (I also max out my IRA each year, but since i have taxable savings, I simply transfer money from a taxable account into my Roth IRA, so I'm really not saving additional money. So i don't include the IRA in the calculation.)

But if i look at the bigger picture of what i'm trying to do to reach retirement quicker, I am pleasantly surprised....

That's partly because I'm inching closer to the time when all my money management efforts on several different fronts will eventually coalesce, and i can begin to see the light at the end of the tunnel.

What in the world is she talking about, you say? Well, I've been aggressively paying down my mortgage for quite some time. Well, really since i got the thing in 1995, 13 years ago.

There was a time i was just throwing an extra $100 a month toward it, but as my income slowly grew over the years, and after i studied amortization tables and realized how much money in interest i could save by prepaying, especially in the early years of my mortgage, i gradually upped the ante over a period of time. Then, back in November of 2006, i increased it to its current level, an extra $425 a month in prepayments. Even with a greatly reduced income at that time, i stubbornly didn't want to lose ground, so i tightened my belt, as they say, and resolved to maintain the current level of prepayments regardless.

People often refer to their mortgages as "forced savings," because paying it, rather than rent, helps you build equity. (How much equity, during the current real estate slump, is another story, but let's put that inconvenient thought aside for now.)

So if i take my current gross monthly income and subtract both the $875, or 15%, i put toward my 401k monthly as well as the $425 in extra payments toward the mortgage monthly, i can see that i'm actually living on 77% of my salary and saving 23% (if you include my mortgage prepayments as savings, which i do.) Nice.

These numbers are also helpful in coming up with a more accurate idea of how much money i'll need to live on in retirement.

If you go with what the "experts," say, i would need about 75% of my pre-retirement income. Well, my income changes all the time, but ok, right now, 75% of that would be $52,500 annually. That still sounds like a lot to save, multiplied by 30 years, doesn't it? That would be $1.575 million.

But since I've already calculated that i'll have the mortgage paid off several years before i retire, i know i can shave off the following from the annual income needed: my mortgage principal ($770 x 12 months = $9,240), mortgage prepayments ($425 x 12 = $5,100) and 401k contributions ($10,500). These 3 items will no longer be expenses when i retire, and they total a whopping $25,840.

So going back to that figure, $52,500, which represents 75% of my current salary, if i subtract $25,840 from that, I only need to count on saving $26,660 a year to maintain my current standard of living (which sounds wierd, given that i'm now making $70,000). And that's not including Social Security. So if, say, i retired completely at age 60 (which i don't intend to do, by the way), i'd only need to save, in today's dollars, $800,000 to fund 30 years in retirement. I haven't factored in inflation, but i haven't factored in any interest earnings, either.

As you can see from my sidebar profile, i'm planning on going beyond that target, to $1.2 million becus i don't want to cut it too close.

These are just ballpark numbers and there are lots of variables, but i guess the takeaway here for me is that, provided you can have your home paid off by the time you retire, you shouldn't necessarily feel overwhelmed by the experts' projections of the huge amounts of money you'll need in retirement.

This is, in fact, emerging as the theme in the opening chapters of the book i borrowed from the library today, Retire on Less Than You Think.

Of course, if you have children, as most people do, you'll probably equate all of this to fantasyland, since i don't have to worry about raising a child, let alone college tuition. However, i also don't have a spouse's second income as backup, either. It's all on me.

Now there are many out there who don't view mortgage prepayments as a smart thing to do because investments usually out-perform. Course the current market, once again, could put that rule of thumb on its head. My mortgage rate is 6%, BTW. But paying it off early is a conscious choice of mine, whether or not i could earn a little more by putting the extra payments into my mutual fund investments. I'd rather sleep well at night and get rid of one really giant bill, the biggest i have.

Being on this self-imposed savings "schedule," i often feel that money is "tight." I would estimate that after all "routine" expenses are paid for at month's end (and that includes some modest eating out, a small amount of clothing shopping, perhaps or miscellaneous expenses), I have about $600 to $750 left over, which, if i've been very spartan for the month, i can put toward savings. But more often than not, what seems like an ample amount of extra money is sucked up by unexpected bills and all i hear is a "whoosh" as the money disappears.

For instance, in September, I had 2 unfortunate big bills that put me in the hole on paper, anyway, by about $474. One was a $700 car repair bill to fix my emissions system. Another was a $605 annual assessment for our sewers; the money goes toward the construction of the sewer treatment plant and i'm stuck paying off a $10K mandatory loan for another 8 years or so. So those 2 combined big expenses once again zapped my every effort to "save" a little more.

Interesting stuff, though, isn't it?