It’s the big question every investor wants to answer: “What is the target nest egg I need to save in order to retire comfortably?” You’ve probably heard certain numbers thrown out in an attempt to make the answer seem cut-and-dried. However, the truth is that a one-size-fits-all answer to such a complicated question simply doesn’t work. The actual figure depends on a number of factors that will differ from one person to the next, such as whether or not you have a pension and how you plan to live out your later years. (For more, see Will Your Retirement Income Be Enough?)

When you choose to retire may have the biggest impact of all. Those who retire early will need a lot more saved, not only because they’re likely to have a longer retirement but because they’ll be getting less money from Social Security. You’re eligible to receive benefits as early as age 62, but you’ll only receive 75% of your full benefit. Spouses get less money, too. You don’t reach your full retirement amount until age 66 (if you’re born in or before 1954). If you wait until 70, you’ll get an even bigger check – one worth 132% of your “full retirement” benefit. Even if you wait to collect, retiring early means you will have paid less into the system, another reason your checks will be smaller.

Your Target Nest Egg

To figure out how much you’ll really need in retirement, the first step is estimating your annual spending once you leave the workforce. It’s easy to think your outlays will fall off a cliff once you retire, as you won’t have to pay for a commute or fund your individual retirement account (IRA) or workplace 401(k) plan.

Nevertheless, you’ll probably have new expenses, too, such as travel or the hobbies you decide to take up in your newfound free time. As you get older you’ll likely have to put more money toward medical bills or even long-term care. Experts say most adults can count on retirement expenses in the ballpark of 80% to 100% of your pre-retirement costs, depending on the lifestyle you choose.

Once you have your projected budget, in today’s dollars, deduct any money you’ll receive from a pension, Social Security or other sources of income (for an estimate of how much you’ll receive from the program, you’ll want to create an account on the Social Security website). The remaining figure is how much you’ll need to draw on your investment accounts each year.

For those who retire at the full retirement age, University of Iowa finance professors John Spitzer and Todd Houge suggest you multiply the figure by 20 to arrive at your required nest egg. So if you need $40,000 a year from your investments, you’d need $800,000 in your accounts. “Using the multiple of 20 provides a good estimate if you are planning to retire at age 67, and you need the income to cover both you and your spouse for the rest of your lives,” Spitzer and Houge wrote in a column on the Iowa Center for Wealth Management website.

On the other hand, if you retire early, the multiplier should be larger. To arrive at a target nest egg, they recommend that those retiring at age 62 multiply their annual withdrawal amount by 25. (For more, see The Pros and (Mostly) Cons of Early Retirement.)

While those figures are a good starting point, you’ll want to adjust them based on your unique circumstances. For example, the multipliers that Spitzer and Houge suggest are geared toward individuals who have money in traditional retirement accounts, for which withdrawals are taxed at ordinary income rates. The number would go down if you have most of your money in a Roth IRA, as withdrawals are tax free.

It’s also worth bearing in mind that they base their numbers on the assumption that today’s low interest rates will return to pre–Great Recession territory over the next few years. If you’re not as confident about that prognosis, you may want to bump up the multipliers accordingly.

Don’t Panic

It’s easy for someone who’s only a decade or so away from retirement to look at his or her 401(k) or IRA balance and get depressed. However, bear in mind that because of compound interest, balances tend to grow more as you advance in your career. So what looks like a modest sum now may get a big boost yet – especially if the stock market has a good run.

If a quick calculation on an investment calculator doesn’t leave you feeling any better, do whatever you can to get your savings in overdrive. That includes taking advantage of the 401(k) and IRA catch-up provisions that let you kick in more money once you reach age 50. Age-eligible adults can contribute an additional $6,000 annually to a workplace plan and an extra $1,000 annually to an IRA. Boosting your savings might require you to do a little belt-tightening in the short run, but you’ll hasten the day when you can retire without undue worry about how much money you have.

The Bottom Line

Arriving at a target nest egg is a highly personalized question, and the age you leave the workforce is often the biggest factor of all. If you’re hoping to quit the workforce early, make sure you have enough to make it through a long retirement with less monthly income from Social Security. (For more, see Your Retirement Nest Egg: How to Spend It Wisely.)