Ask a Fool: How Much Money Do I Need to Retire Comfortably?

When it comes to your retirement nest egg, it's not so much about aiming for a certain dollar amount as it is estimating how much income you'll need in retirement. There's no one-size-fits-all formula to figure this out, but 80% of your pre-retirement income is a popular rule of thumb, and will allow the average person to maintain their quality of life after retiring. So, multiply your current income by 0.8 (adjust accordingly if you plan to have a particularly frugal or expensive lifestyle in retirement).

Next, subtract your other retirement income sources. Social Security is an example, and you can estimate your benefit amount by logging on to www.ssa.gov and viewing your most recent Social Security statement. Account for any expected pensions or annuities as well.

This is the income you'll need from your savings. The "4% rule" of retirement can give you an estimate of how much you'll need in savings to sustainably generate this amount of income. To apply this, multiply your savings income need by 25.

Source: Fool.com