Most experts say your retirement income should be about 80% of your annual income at the time you leave the workforce and enter retirement. An easy calculation would be for a $100,000 income at retirement, it would be helpful to have about $80,000 per year to live comfortably upon entering retirement.

You may have additional adjustments that can be made for other sources of income during your retirement years. These may include Social Security, pensions, part-time employment. You may have other factors that could affect your needed income like your health and desired lifestyle while you are retired. Say, if you want to travel a lot during retirement or live more luxuriously, you should definitely plan on those expenses while saving for retirement.

Many methods exist to plan on the amount of savings you need to get the retirement income you want. One easy formula is to estimate your annual retirement income and divide it by 4%, also known as the 4% rule. Say your estimated income is the $80,000 mentioned above, and you want to use this rule to plan your nest egg. Divide it by 4% ($80,000 / 0.04) and get an answer of about $2 million needed at retirement.

Beyond this amount, you need to consider your return on investments where you are saving during your working years, including anything that may come out after taxes and inflation. Again, you will need to consider whether you will have any additional retirement income, and what your lifestyle at the time of retirement will cost. Even more, your life expectancy plays a valuable factor in the amount of money that will keep your retirement income sustainable. It is important to remember that the 4% rule assumes that you will live in retirement for about 30 years. If you intend to retire early or have a longer life expectancy, it could need to be more since many expenses will increase as you age.

So, the most important thing to know about calculating your retirement savings is the fact that many considerations come into play. There is likely no one solid answer for a lump sum that can safely enter you into retirement. It is helpful to start saving into retirement funds with up to 15% of your annual income sometime in your 20s and continuing throughout your working life. This way you have retirement savings across various accounts and various investments that accrue benefits.