Determining the Size of Your Nest Egg

Kotlikoff, the Boston University professor, takes a different approach. His ESPlanner program calculates the amount of spending you can do and still maintain a constant standard of living. It can be used, he said recently, not only to figure retirement but to make many pre-retirement decisions such as choosing between a 15- and a 30-year mortgage or picking the proper amount of life insurance.

The program also allows a person to make informed choices about how much to save, he said. For example, he said, a worker may find that if he puts more in his 401(k) plan, his standard of living might take a 10 percent hit now but be 20 percent higher after retirement. "For some people it will make sense" to do that, for others not, but "all questions come down to the living standard."

Kotlikoff called the 70 to 80 percent replacement rule "blindingly stupid" because it assumes spending remains the same "right through age 90." In fact, he said, retirees generally spend less as they get older, so the traditional approach yields a retirement savings goal "for the average middle-class American [that is] four to five times too high."

Advocates of that methodology, of course, do not agree, noting that while it may be conservative, it is better to save too much than too little. The consequences of running out of money because you underestimated your retirement needs are extremely unpleasant.

Increasing numbers of employers are signing up with planners, mutual funds and other advisory firms to offer their workers free or cut-rate calculators and planning help. If your firm offers such help, it makes sense to take advantage of it.

Otherwise, you can try the free online programs, or perhaps buy one of the more sophisticated ones, which can cost up to several hundred dollars.

Or, if you would like more personalized help -- maybe you would just like a clearer picture of where you stand, or perhaps you're considering a major step such as retiring early but worry it might be financial suicide -- you can hire a professional financial planner. Of course, planners also use software, but at least you can ask questions about the assumptions the program is making.

Or you can do what most Americans seem to be doing: Save what you can and hope for the best.