FORGET SOCIAL SECURITY: START SAVINGS NOW : NEST EGG SHOULD BE $1 MILLION OR EVEN MORE, EXPERTS ADVISE.

Byline: Janet L. Fix Knight-Ridder Tribune News Wire

Last month, a report predicted that aging baby boomers will suck the nation's retirement trust fund dry in 33 years - even before the last boomer trades work for leisure.

``People who believe in UFOs are the only ones who believe Social Security will be there for them,'' quipped Deborah Steelman, a Washington lawyer and former chairwoman of an independent advisory council on Social Security.

Congress is expected to save Social Security from going bust. But there are still very real questions about just how useful the federal retirement program will be in the next century.

A Social Security fix won't be quick or easy, for political and other reasons. And any fix is sure to require workers to pay more in payroll taxes now, or take less in benefits later - most likely both. For some middle-class and affluent retirees, benefits could disappear.

So baby boomers are left with the question of how much more they should save to protect themselves from possible future cuts in their Social Security safety net. The answers are in the mind-boggling millions, thanks to social ``insecurity,'' shrinking corporate pensions and inflation.

Because of corporate mergers, downsizing and job changes, many boomers can't count on the generous pensions that paid for their parents' retirements. And they shouldn't count on the windfall their parents got by selling the family home. Some economists predict housing prices will plummet when millions of boomers try to trade the family home for a retirement home.

Many people know this. That's why they're stashing part of their pre-tax income each year in their companies' 401(k) retirement savings plans.

How much? On average, about 6 percent of their annual income, or $5,000, according to the 1996 Equitable Nest Egg Survey, an annual survey of boomer savings. But that's $1,000 less than they did in each of the past two years.

Many are in for a big shock: They're probably not even saving enough to accumulate what they need to maintain their current standard of living in retirement - even if Social Security is NOT cut - much less live the life of leisure most say they want.

If they start at age 45, they should be saving 24 percent of their income to maintain their standard of living in retirement, with full Social Security.

Without Social Security benefits, boomers would be in even bigger trouble.

Under that scenario, boomers would need to save closer to 40 percent annually if they're in their mid-40s, earning about $50,000 a year, and have just begun to save - like Robin Meadows.

``I figure we'll have to work forever,'' said Meadows, a 44-year-old Michigan real-estate agent married to Peter Laboda, a 50-year-old chef. ``We'll never be able to save enough.''

She's probably right, but she's not alone.

Many workers, and their employers, have to do a lot more - and quickly - if they are ever going to be able to stop working, Steelman and other financial experts say.

``Boomers will work longer, pay more into Social Security, and get less,'' unless changes are made, Steelman said.

The oldest of the 76 million boomers turn 50 this year; the youngest turn 32.

While their elders are getting by with a nest egg of $150,000, according to the Equitable Survey, boomers will need more than $1 million to do as well, even with Social Security.

``The situation is ominous,'' says Karen Field, senior manager of KPMG Peat Marwick, the national tax and accounting firm. ``Most people can't even save 10 percent of their income. But they can't afford not to. Employers can help by doing more.''

Her advice: Save as much as you possibly can and then more. Lobby your employer to help by providing a top-notch 401(k) retirement savings plan that matches part of your savings with a company contribution and allows you to save as much as possible pre-tax.

This year, the pretax limit is $9,500 a year, unless your plan sets a lower limit - for example, 10 percent of your income. Limits vary by plan because of other pension and profit-sharing contribution limits and rules.

Many employers already help in a big way, Field says.

A recent KPMG survey found that more than 50 percent of company 401(k) plans match employee savings with corporate contributions of 50 percent or more, up to a certain level, typically 3 percent to 6 percent of pre-tax income. Some companies match employee savings dollar for dollar.

Financial planners also advise people to count on what they save in their tax-deferred retirement savings for the bulk of their retirement nest egg.

``I'd no more tell people to count on Social Security than I would tell them to count on food stamps,'' said Bert Whitehead, a financial planner in Detroit. ``Social Security is a Ponzi scheme, and . . . it's bound to end as we know it.''

Contrary to popular opinion, Social Security is not a huge savings account waiting for retirees to write checks against it. For 60 years, it's been a pay-as-you-go business. Today's workers pay the benefits of today's retirees, and because workers outnumber retirees, Social Security is racking up nice surpluses. But as more boomers retire, those surpluses will disappear, most likely by 2025.

To prevent such a shortfall, some want to leverage extra payroll taxes now to pay future retiree benefits. Two options are under consideration: Allow the government to invest part of payroll taxes in stocks, or allow workers on their own to invest part of their payroll taxes in stocks.

Nearly 70 percent of boomers want the chance to decide how part of what they contribute to Social Security is invested, Equitable's survey found. One big reason: Historically, stocks have significantly outperformed bonds, but currently, Social Security invests its surplus in government bonds.

Tying Social Security to stocks is risky, critics say, because stock prices could be down when millions of boomers are ready to claim benefits.

The sooner you start to save, the less you have to save, thanks to the value of compounding and the power of stocks, which have in the last 25 years averaged a healthy 10 percent annual return.

For example - to have $100,000 by age 65, a 35-year-old would need to invest $82 a month, or $30,000, over 30 years.

A 50-year-old, meanwhile, would have to invest $574 a month, or $69,000 over a 15-year period, to have a $100,000 nest egg.

But no matter your age, the first step is to start saving. Then figure out how much more you need to save in case Social Security benefits are trimmed or cut completely.

How much you'll need depends upon how well-off you want to be, how much you've already saved, how long you have until retirement, and whether your employer matches part of your savings.

An entire industry of magazines, books, computer software, on-line services, mutual fund companies and financial planners exists simply to help you figure that out.

But be prepared. How much you should save - even if you end up with full Social Security benefits - may shock you.

Typically, if you're 30 years old, married, want to retire at 66 and maintain your current standard of living, you'll need to accumulate $2 million, suggests Alan Cohen, a financial planner in Bala Cynwyd, Pa.

``Real panic sets in when you tell people how much they need to save, because they know they can't do it,'' says Trip Bosarth, an investment adviser for McDonald & Co. in Birmingham, Mich.

Bosarth wants Congress to cut income taxes, so workers have more to save, increase the amount they can save in tax-deferred accounts, and revive the use of Individual Retirement Accounts by making more people eligible to deduct the $2,000 they can invest annually.

``For many people, there's just not enough time to save what they need to,'' Bosarth adds. ``And every day that goes by without Congress and employers doing something to help, the problem gets worse.''

SAVING FOR YOUR FUTURE Afraid Social Security won't be all you wish it would when you retire? You may be right. Here are some tips to make sure you'll be financially secure no matter what happens to Social Security.

SAVE TILL IT HURTS: Make saving a priority. Save at least 10 percent, if not 20 percent, of your income if you hope to retire at 65 and maintain your standard of living until death, say most financial experts. Can't possibly save that much? Think again. Do you really need to eat out three times a week, rent dozens of videos a year, buy a new TV or a new car every few years? Think before you spend, and you may realize you can do without a lot. And you'll be a lot closer to your goal.

SAVE AUTOMATICALLY: What you don't see, you don't miss. So have money automatically withdrawn from your paycheck and deposited into a savings account and your company's stock purchase plan. You can also buy mutual funds by having as little as $50 monthly withdrawn from your checking account. Do this and you won't have to come up with $2,000 or more to open an account at some mutual-fund companies.

STASH THE MAX IN A 401(k): It is one of the last remaining tax shelters, because you don't pay taxes on what you contribute or earn until retirement. It's also the fastest way to get your savings to grow. If your employer allows you to put 15 percent of your pretax income into a 401(k) every year, put in the full 15 percent. Some may allow closer to 20 percent contributions.

This year the government allows a maximum pretax contribution of $9,500 to 401(k) plans. If your plan doesn't allow you to save that much, ask why. It may be because your plan was set up years ago and can be increased. Too many employers don't review their plans often enough. If it can't be increased, the plan may be limited by IRS rules involving contributions to pension and profit-sharing plans.

PUSH YOUR EMPLOYER TO HELP: If your employer doesn't kick in cash to your 401(k), ask your employer to match your contribution in some way, preferably dollar for dollar.

Beg if you have to, says Karen Field of the accounting firm KPMG. One way or another, help your employer understand the match is not only good for you, it's good for your employer. Companies that don't have contributory 401(k) plans are at a competitive disadvantage, Field says, and less likely to recruit - and keep - the best employees, because more than half of 401(k) plans have a corporate match of 50 percent or more.

With an employer match, you can save more than the $9,500 allowable. But the amount you save with your employer's match cannot exceed 25 percent of your total compensation. If you make $30,000, that means the total contribution would be $7,500 this year.

INVEST ALL YOU CAN IN IRAs: If you haven't invested in an Individual Retirement Account because you could no longer deduct the $2,000 from your taxable income, start investing again. Even if your investment isn't deductible, it should grow faster than other investments because it can't be taxed until you withdraw it after age 59.

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