Many financial experts will have you believe that retirement planning is a complex world of spreadsheets and specialized knowledge. That's only halfway true. An expert can add value to the planning process -- but you can also start preparing for retirement independently. You just need to know which assumptions to make and what they mean.

The two sample retirement plans below provide a framework for your independent retirement planning. Use one or both to identify a starting point for retirement readiness. You can always retain an advisor later to flesh out more details -- but getting started is something you should do as soon as possible. 

1. Retirement plan for the detail-oriented

There are advantages to taking a more thorough approach to your retirement plan. For one, the first step of an in-depth plan involves reviewing your living expenses. That process usually reveals some easy cutbacks you can make to spend less and save more.

And two, mastering your financial details should help demystify retirement planning to some extent. That, in turn, can help inspire confidence that you're moving in the right direction.

Adult couple smiling in front of home.

Image source: Getty Images.

This first retirement plan walks you through your retirement living expenses, as well as your estimated Social Security, the income you need from savings, your target savings goal, and how much to invest to reach that goal.

  1. Calculate current living expenses.
    1. Add up your monthly expenses.

    2. Add prorated amounts for expenses that occur quarterly, semi-annually, or annually. Examples include homeowners association fees, insurance premiums, personal property taxes, and real estate taxes that aren't included in your mortgage.

    3. Also include the income taxes that are currently deducted from your paycheck. 

  2. Make adjustments for changes to your living expenses in retirement. Your expense mix may change once you leave the workforce. Estimate the net change by adding expenses that will be higher and subtracting expenses that will be lower. Here are some sample numbers to show how this works. 

    1. You think you'll spend $350 more monthly in retirement on healthcare premiums, copays, and deductibles.

    2. Once you retire, you'll likely stop making retirement contributions. You may not be making any today, but for our example, let's assume you're contributing around $720 monthly. This is 15% of an average $58,000 salary.

    3. In retirement, you'll also stop paying FICA taxes. These are 7.65% of your pay, which you calculate to be $367 monthly.

    4. That's $350 minus $720 minus $367, or negative $737. Your net expected change is a $737 reduction in living expenses.

  3. Estimate your annual retirement living expenses. Total your current living expenses and the adjustments. Multiply by 12 to get an annual number.

  4. Estimate your annual Social Security income. You can find your estimated Social Security income by creating an account at my Social Security. Once you log in, you'll see benefit estimates at different claiming ages. If they don't look right, check your earnings record for accuracy.

    Find the benefit estimate for the age you plan to retire. Multiply it by 12 to get an annual number.

  5. Estimate income needed from savings. Subtract your annualized Social Security estimate from your annualized adjusted living expenses. The answer is the minimum income you'll need from savings. You might add 5% or 10% as a cushion.

  6. Estimate your target savings balance. To find your target savings balance, multiply the answer to Step 5 above by 25. This assumes you'll withdraw 4% of your savings balance annually.

  7. Calculate the monthly contribution needed to reach your target savings balance.

    1. You'll need the help of a compound earnings calculator like this one to calculate how much to save and invest monthly to reach your goal.

    2. Any compound earnings calculator will ask you for an estimated interest rate. You can use an inflation-adjusted rate of 5% to 7% depending on how aggressively you are invested. If you hold mostly equities and plan to stick with that, you'd use 7%. If you have a more balanced portfolio, a lower rate is more appropriate.

    3. As a caveat, these growth rates are averages. That means they'll be more accurate for timeframes of 10 years or more versus shorter durations. 

    4. The calculator will return a monthly savings amount required to reach your goal on your timeline. Use that as your starting point and then redo this exercise every year to check your progress.

2. The quick-and-dirty retirement plan

If the seven steps above feel overwhelming or you're having trouble even relating to the concept of your own retirement, you might prefer a more streamlined approach. This second retirement plan gives you just enough information to start saving. There are only two steps. 

  1. Estimate your target savings balance. Multiply your gross income today by 15.

  2. Calculate the monthly contribution needed to reach your target savings balance. Use a compound earnings calculator to calculate how much to save and invest monthly to reach your goal. 

These are the assumptions baked into the two-step plan:

  • You claim Social Security at your Full Retirement Age (FRA). Social Security normally replaces about 40% of working income, but only if you wait until FRA to claim. Claim earlier or later than FRA and the replacement percentage could be lower or higher.
  • Your living expenses in retirement will stay the same. If you expect your lifestyle to expand, use a higher multiplier than 15 -- say 18 or 20.
  • You will withdraw 4% of your retirement savings annually to use as income.

As with anything, the quick approach here can be less accurate. Plan on rechecking and refining your strategy at least once annually so you know how much progress you're making.

Detailed or quick, you need a plan

Whether you prefer to master the details or brush with broader strokes, having a plan to guide your retirement savings is important. It helps you define what's possible and gives you actionable steps. But best of all, a good plan should motivate you to start saving and investing. If your plan does that, it's already proven its value.