I’ve heard this question often enough that it’s time to formulate a standard answer.  Your financial planner should be able to put together a comprehensive plan that would consider the amount of investments you have in IRA’s, 401K plans, potential amounts from Social Security and, of course real estate.  I like being able to do this myself, at the expense of some accuracy.  I do my own using some simple tables and my calculator and then, submit it to my financial planner for further verification. To answer the question, I would do the following:  First you need to come up with how much income you’ll need when you retire.  You take your current gross income, and apply the factors I’ve outlined below.  You have to make a guess at what inflation will be between now and the time you retire.  Since nobody knows for sure, the only reasonable thing to do is take a low rate of inflation and a high rate of inflation.   Let’s  use 3% and 6%.  Those inputs, together with a range of short to long term scenarios, say 10 to 25 years, yields the following factors which can be used to estimate the size of a retirement “kitty” needed.

Now that you’ve addressed the question of “how much”, it’s time to focus on the “what”. In my next post on this subject,  I’ll talk about ways to put that “kitty” to work.