Retirement costs; determining what is a reasonable investment fee.

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Investing

Q: Is it possible to estimate how much money a single woman, living in the New York metropolitan area, would need to have saved to retire comfortably at age 55? Assume that Social Security, when it kicks in, will be at the upper end.

A: Like the rest of life, it all depends on the choices you make. If you check The Broke and Beautiful Life website, for instance, Stefanie O’Connell estimates living costs at about $2,500 a month for a young single woman. That estimate is for having a room in a shared apartment, an unlimited Metro card for transportation and groceries of $300 a month. Clothing is absent, but the budget includes savings of $350 a month and health insurance of $328 a month.

Since her budget is for a young person who is not retired, you’ll need to make some adjustments so the budget will reflect age and personal choices.

One thing you can bear in mind is that you’ll have plenty of places to “fall back” to if the budget doesn’t work out. If you live in New York City — Manhattan or Brooklyn — you can move just about anywhere in the country and cut your cost of living substantially.

The hardest part of this idea isn’t living in New York. It is retiring at 55 and waiting at least seven years for reduced Social Security benefits. That takes real money.

Q: Is there a guideline for what a “reasonable” fee for management of an investment account should be? I have a feeling that the quarterly fees I’m paying are a bit excessive. What recourse do I have — other than moving my account to another managing firm? Are these fees negotiable?

A: Yes, management fees are negotiable. How much you can negotiate depends on how much you are investing. Large accounts can negotiate quite a bit.

Small accounts can’t. Brokers at major firms, for instance, sometimes complain that they are discouraged from even opening an account if it has less than $250,000.

“Reasonable” depends on who is doing the observing. All-in fees for insurance products run 2 to 3 percent a year. Wrap accounts at brokerage firms run less, but 2 percent is viewed as reasonable by those who make their living managing such accounts.

In the end, “reasonable” is defined by the cost (and income expectations) of the distribution system that is delivering the services. The hands-on, meeting-with-you-at-home services are priced accordingly.

Today, it is easily possible to have your investments managed for well under 1 percent a year. Over the last 10 years, for instance, Vanguard Balanced Index Fund Admiral Shares have provided a higher return than 88 percent of the competing managed funds.

That’s hard to beat, but many investors would not have stayed in this fund or any other fund over the last 10 years if they had not had a real person to reassure them in the tough times.

But if you pay too much for reassurance, you’re back where you started.