## Q: I'm 50 and I'm trying to figure out when I'll be able to retire. How much money should I aim to have in savings?

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.

Finally, keep in mind that the previous step tells you your retirement number in today's dollars. Be sure to account for inflation (a 3% average rate is a reasonable expectation). To find your inflation factor, take 1.03 and raise it to the power of how many years you have until retirement -- let's say 15 -- which produces a factor of about 1.56. Multiplying this factor by the result in the previous step is a good estimate of what your retirement savings target should be.

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