Determining the Size of Your Nest Egg

Well, one step that almost everyone agrees on, as Berra might say, is to figure out where you are going -- in other words, what kind of retirement you want and what your goals are.

For example, do you want your retirement to be a life of leisure, at least at first, filled with such activities as traveling, going to plays and concerts, eating in fancy restaurants and the like? This is the kind of retirement that, as Glassman said, might well be more expensive than your working years.

Or, do you think you would be content putting your feet up, reading all those books you never got around to, watching sports on television, or writing in your blog? That sort of life would likely be inexpensive.

You need to start thinking about those sorts of issues to have any idea of how much money you will need to be comfortable.

Then there is the question of bequests. Do you want to leave a nice chunk of change to your children or other heirs? That would mean not drawing down all your assets during retirement, requiring, in turn, a bigger nest egg or less luxury -- or an earlier death, which solves many financial problems but is not the solution most of us would choose.

Now how much do you think you will need?

In the information age, there are dozens of calculators available to help you come up with a number. Just type "retirement calculator" into a search engine, and you will see. Many calculators are free, such as those sponsored by mutual fund companies such as Fidelity and Vanguard, and are generally simple to use. Just plug in a few bits of information, and they will either crank out a "goal" and how much you need to save to get there, or they will tell you where you will end up if you continue on your present path.

Most allow you to adjust various parameters, such as the percentages of stock and bonds or general rates of return or how long you expect to live in retirement. This is nice for playing what-if games, but since few of us can predict market returns or how long we will live, it is not clear how much those results will mean.

Some firms offer more sophisticated calculators, usually for a fee, that ask for a more detailed picture of your situation. Some may offer Monte Carlo statistical simulations in which thousands of combinations of such factors as inflation and rates of return are run and the probability of various outcomes is computed.

The idea is to show the likelihood of success -- the money lasting as long as you do -- of various strategies, usually involving the share of your investments you put into stocks, into bonds, and so on.

Some of these calculators are quite detailed, taking into account Social Security, your existing portfolio, including assets not held in retirement accounts, and other factors.

But one thing most of these calculators have in common is that they assume you build up your nest egg until you reach retirement and then draw it down.