How much money will you need to retire? Probably more than you think! Extended life spans, reduced employer benefits, lower market returns and increased costs of living have forced us to have to save more. Unfortunately, most Americans are doing a poor job of securing their future. The Employee Benefits Research Institute reports that if current trends continue, by 2030, the annual shortfall between the amount retired Americans need and the amount they actually have will be at least $45 billion. If you want to avoid having to flip burgers at age 75, one of the best things you can do for yourself is to calculate now how much you'll need in the future.

The Need to Plan
Two generations ago, corporate pensions and social security ensured a secure retirement for our grandparents. Today, pension plans have become virtually extinct, shifting the burden of retirement savings away from corporations and onto the employees. Our retirement depends largely not only on our own ability to save and invest wisely, but also on our ability to plan.

According to the U.S. Census Bureau, as of 2005, 50% of workers have no retirement savings at all. The rest have very little. Of workers age 55 to 64, 75% have household retirement savings of less than $56,000. Most of these people will be forced to extend their work years or accept living in poverty. How can this disastrous scenario be avoided?

How Much You Need in Total
Your first step in planning is determining how much you'll need.

Studies indicate that retirees will need to between 80% and 90% of their pre-retirement income to maintain their current standard of living. So, a reasonable target is one that will provide you with an annual income similar to the income you have now. Then you need to consider a "safe" withdrawal rate. This is the percentage of your retirement nest egg you will withdraw each year during your retirement. Research indicates that, if they have saved enough, retirees can best preserve their assets if their annual withdrawal rate is 6% or less. This provides a quick and dirty formula for determining the total amount you need to save by retirement: divide your desired annual income by the withdrawal rate.
So, for example, if you want to target a retirement income of $60,000 per year, you need to save $1 million ($60,000 / 0.06). The following table offers some quick estimates of how much you might need to accumulate before you can retire.

Annual Retirement Income Need	Total Nest Egg Required (Estimate)
$50,000	$833,333
$100,000	$1,666,667
$175,000	$2,916,667
$250,000	$4,166,667

How Much You Need to Save Each Month
Keep in mind that the above table is based on a rough formula. When calculating your target nest egg, and how much you have to save each month to reach that target, there are many factors that come into play: