5 steps for figuring out your 'big number'
By Leslie Haggin Geary • Bankrate.com

How much will retirement cost? If that question stops you in your tracks, you're not alone. Over half of workers have yet to compute how much money they'll need when they quit working. Among them, 77 percent can only "guess" how much will be enough, according to the Employee Benefits Research Institute.

That's a shame because studies show that people who have set retirement goals and saved for their retirements say that their life in retirement is actually better than they expected. You don't need an advanced degree in finances to come up with how much you'll need in retirement. Just follow these five steps to arrive at that magical number.

5 steps for figuring out your 'big number'

Understand your spending style. Decide when you want to retire. Keep inflation in mind. Think like a nonprofit. Fine tune your strategy.

What's your spending style? Your first consideration should be taking a look at your expenses. If you've got a budget, you're a step ahead of the game, because at this point you really need to know what you spend on a daily basis. If you don't have a current spending plan, it's time to start tallying numbers, from groceries to entertainment, mortgage or rent, utilities and so forth. There are a slew of ways to get a handle on these costs. Keep track of bills and receipts for a month or two, or use financial software, such as Quicken, to help. But as you look at the numbers, start thinking about if you'll get by with more or less in the future. If you're not sure, take a cue from the pros. Financial advisers generally recommend you amass a nest egg that's big enough to get by in retirement on at least 70 percent to 80 percent of your working income. Other experts say it's much safer, and realistic, to plan on spending more, even up to 100 percent of your pre-retirement income.

Are you worried about having enough money to retire someday? Or, do you have a plan of action? Share your story.

-- Posted: April 23, 2007