ssh "permissions are too open" error

Keys need to be only readable by you:

chmod 400 ~/.ssh/id_rsa

If Keys need to be read-writable by you:

chmod 600 ~/.ssh/id_rsa

600 appears to be fine as well (in fact better in most cases, because you don't need to change file permissions later to edit it).

man ssh:

 ~/.ssh/id_rsa
         Contains the private key for authentication.  These files contain sensitive 
         data and should be readable by the user but not
         accessible by others (read/write/execute).  ssh will simply ignore a private 
         key file if it is              
         accessible by others.  It is possible to specify a
         passphrase when generating the key which will be used to encrypt the sensitive 
         part of this file using 3DES.

~/.ssh/id_rsa.pub
         Contains the public key for authentication.  These files are not sensitive and 
         can (but need not) be readable by anyone.