We all want to enjoy a secure and comfortable retirement. The big challenge is to save enough money today to reach that goal.

Well, we’ve come up with a worksheet (don’t panic!) to guide you through the “How do I get there?” maze. Our worksheet is 10 times simpler than others we’ve seen, taking just six steps. Sure, it’s still going to take a little effort on your part to work the calculations, but it’s well worth it. After all, without good retirement planning, you may find yourself on thin ice rather than “on golden pond!”

Before you start your worksheet below, let's talk about inflation and return. We'll assume an 8% rate of return on your investments – a conservative estimate based on long-term historical averages. We'll also assume a 4% inflation rate. So, when you factor in inflation (8% return - 4% inflation), your real return is 4%. The actual return and inflation figures may vary a little from year to year, but over the long run they'll hover around our estimates.

Now, let's walk through the worksheet together (we've included an example to help you along.) OK, grab your calculator and let's go!

STEP ONE: Total Income You’ll Need in Retirement

1. Figure the amount you’ll need annually in retirement by multiplying your current income by .70.
2. Use Table One on the next page to find the 4% Growth Multiplier that corresponds with the number of years before you retire.
3. Adjust your income for inflation by multiplying 1a x 1b.
4. Use Table Two to find the 4% Future Value Multiplier that corresponds with the number of years you're expected to live in retirement.
5. Figure the amount of inflation-adjusted income you’ll need in retirement by multiplying 1c x 1d.

STEP TWO: Total Amount You Expect to Collect From Social Security

This section will be most accurate if you know how much you're due to get from Social Security. If you don't yet have this information, call 800/772-1213 and request Form SSA-7004.

1. Today's projected Social Security benefits.
2. Adjust Social Security payments for inflation by multiplying 2a x 1b.
3. Figure the future value of your Social Security benefits, adjusted for inflation, during retirement by multiplying 2b x 1d.

STEP THREE: Total Amount You Expect to Collect From Pension

Most big company pensions will pay out 1/3 of retiree’s income. This figure includes income from profit-sharing plans and stock options.

1. Figure your pension. Divide salary by 3.
2. Calculate the inflation-adjusted value of your pension benefits in the first year of retirement. Multiply 3a x 1b.
3. Figure the total value of pension during retirement by multiplying 3 b x 1d.

STEP FOUR: Income You Need to Generate

1. Figure total future value of your S.S. and pension benefits by adding 2c + 3c.
2. Figure the total income you need in addition to Social Security and pension benefits by subtracting 4a from 1e. This is your income shortfall.
3. Use Table Three to find the Savings Factor that corresponds with your life expectancy in retirement.

Tables can be found on the next page.

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