Here's a question millions of workers face in an economy where jobs are a major export product. It comes from K.K, a reader in Houston.

"I am 55 years old, single, and have about $280,000 in my 401k to date. I put 20 percent of my $45,000 salary into my 401k account. My 30 years with the company is in December and I would like to retire early in the next year. I will be 56 at the time.

"Working with the projection/forecast tool on my company's web-site, my pension buy-out at that time will be about $265,000. I can take this as either a lump sum or a monthly annuity of about $1,600.

"What do you suggest? Should I roll over the 401k and take the monthly annuity? Or should I roll both over and have about $545,000 to invest? I own my home and a rental property with rental income of $1,000 monthly. My only obligations are about $10,000 in bills and credit card debt.

"Do you think I could retire? I am asking because there is talk about lay-offs at the end of the year and I am trying to plan ahead. I am relatively safe at my job, but you just never know."

This is the New Paranoia, where the enduring source of terror isn't a suicide bomber but your employer. And here's the unvarnished truth: nearly anyone can retire if they are willing to make the necessary adjustments. You don't need to have $1 million to do it. The investment/retirement complex would like you to have at least $1 million because more money means more fees for them.

But if you live modestly, you don't need that much money.

The most important figure in retirement isn't what you have in assets. It's your spending.

Why? Because what you spend determines what you need in assets to support your retirement. If you subtract 401k contributions and payroll taxes from K.K.'s gross income, you learn he'll need to replace no more than $32,600 a year if he doesn't work--- plus a rather significant adjustment for medical insurance.

So here's the key question to be asked about retirement: Are you willing to cut your living expenses?

If so, you can probably retire.

Here are the steps for K.K.: First, build your bridge. Set aside the amount of money needed to bridge the period from retirement to Social Security. That's about 7 years for K.K. You can do this by visiting and using one of their benefit calculators. His future benefit will be roughly $850 a month in today's dollars, after allowing for no further work for seven years.

That's a bit over $10,000 a year. To provide that income until then, he'll need to reserve about $65,000. He'll take the income as series of essentially equal payments from his plans before age 59  ½, without penalty.

Second, figure out how to use your savings. For a 56 year old, taking a life annuity isn't a good choice. So roll the 401k account and estimate the income that can be taken on a sustainable basis. In this case, that's a post-bridge nest egg of $480,000. That, in turn, means a safe annual withdrawal rate of $19,000 to $21,000--- a bit over 4 percent.

Third, add the two cash flow sources. In this case, the total is about $30,000 a year--- not far from the $32,600 netted from work. Add in medical insurance and K.K. will need to cut some corners. A great many people would cut corners to avoid going to work.

Need some encouragement to think boldly?

Get yourself a copy of "Retire On Less Than You Think" (Times Books, 2004, 179 page paperback, $15.00). Written by New York Times "Seniority" columnist Fred Brock, the book presents stories of people who have changed their lives by retiring early. One of those people is Elton Pasea, "the happiest guy in Texas," who lives on well under $15,000 a year but still manages annual bicycle trips in Europe.

Make choices about how you live and spend first. Investing becomes a sideshow.