Wondering how much money you'll need to retire? You're not alone. You can bet that question is top of mind for millions of Americans who are in their 50s and fast approaching retirement, and millions more who are younger than that and eager to make sure that they're correctly answering the question, "How much should I save for retirement?"

Although everyone's retirement numbers depend on their own personal situations, these tips can help you figure out how much of your income you should be setting aside for your golden years.

Average retiree spending

Begin ballparking your retirement savings needs by considering how much money you'll be spending when you retire.

In 2013, the average American over age 65 spent $41,403, which is 26% less than the average American between ages 45 and 54 spent. Therefore, a good starting point for determining your annual retirement income needs is to add up your household's past 12 months of expenses, subtract any one-time expenses, and then multiply that number by 0.74. 

Image source: 401kcalculator.org via Flickr.

You can refine that number by subtracting mortgage payments, if your mortgage will be paid off by the time you retire. 

On the other side of the ledger, you'll want to increase your assumptions for spending on healthcare.

Medicare kicks in at age 65, but you'll have to pay premiums for Part B, which covers healthcare such as doctor visits, and Part D, which covers medicine. The average Medicare Part B and Part D premiums are $121.80 and $41.46 per month in 2016, respectively. You'll also want to factor in out-of-pocket expenses, such as co-pays. If you sign up for Medigap insurance to pick up some of those out-of-pocket costs, then you'll have premiums to pay for that plan too. 

It's also important to remember that Medicare won't cover all your healthcare costs. A comprehensive list of items Medicare doesn't cover can be found here, but most notably, Medicare doesn't pay for long-term care. Assisted living costs about $43,000 per year, and a nursing home can cost over $80,000 per year, according to Genworth.com. And since the Department of Health and Human Services estimates 70% of retirees will need long-term care at some point, you need a plan for those expenses too. 

Overall, HealthView Services estimates that the average retired couple aged 65 spends $583 per month on healthcare, not including uncovered Medicare expenses. Would-be retirees should plan on spending more than double that amount per month by age 85.

Income in retirement

It's typically recommended that you withdraw no more than 4% of your retirement savings annually as income. Withdraw more than that and you increase the risk of outliving your savings. Based on this rule, you'd need a $1 million nest egg to withdraw $40,000 in retirement income every year. 

That would get you pretty close to the average $41,403 being spent by retirees today, but remember that most Americans will receive Social Security income too.

About half of married Social Security recipients rely on Social Security for more than half of their monthly income, but you might want to calculate a bit more conservatively. On average, Social Security replaces roughly 40% of a retiree's pre-retirement income. 

The average retired couple is collecting $26,554 in Social Security income this year; however, the actual amount you will receive in benefits depends on your work history and earnings. As you can see in the following chart, most people are collecting between $700 and $1,800 per month in retirement.

Data source: Social Security Administration.

You can find out how much your Social Security benefit could be by going to SocialSecurity.gov and creating an account. But if we subtract the average retired married couple's haul from Social Security from the average retiree's spending, we have a shortfall of $14,859 that would need to be made up by retirement savings. Using the 4% rule, a $371,475 nest egg would be necessary to close this gap.

Don't forget inflation

When doing your calculations, remember that $1 is likely to be worth a whole lot less in the future than it is today. Prices for goods and services increase every year, and your spending and savings estimates need to account for that inflation.

Historically, inflation has increased by an average 3.22% per year since 1913. If it continued to increase at that pace, its impact on your retirement income needs would be significant. For example, if inflation were 3.22% per year, a 50-year-old hoping to maintain a standard of living equal to 74% of a $60,000 income would need to generate $77,375 in annual income at age 65.

Getting to your retirement savings number

The best way to build up enough in savings to hit your retirement income target is to use tax-advantaged retirement savings plans.

Most employers offer 401(k) or 403(b) plans that allow individuals to contribute up to $18,000 per year ($24,000 if over 50). Traditional IRAs and Roth IRAs are also valuable retirement savings tools. In 2016, the contribution limit for those two types of IRA is $5,500, or $6,500 if over age 50. Self-employed individuals can make use of SEP IRA plans that allow for a contribution that is equal this year to the lesser of 25% of compensation or $53,000.

If you're not maxing out these retirement plans, it's time to start. Because of the power of compounding, or interest earning interest over time, investing more money sooner is the best way to make sure you have enough money set aside when you retire.