One of the first steps in planning for your retirement is calculating how much money you will need to retire. There's no magic number that will guarantee you'll have what you need in retirement. Instead, setting up a comfortable retirement today can take quite a bit of planning.

The amount you need for retirement will depend largely on your current earnings and lifestyle. As a rule of thumb, you'll want to be able to replace 75% of your pre-retirement income for each year you are retired. Some advisors suggest having eight times your final salary saved for retirement through your working years. Others recommend having twelve to fourteen times your income or higher tucked away. For young workers, reaching these levels may mean putting 10-15% of their income into retirement plans. Those beginning to save later will need to save a greater percentage.

Consider Your Costs in Retirement

As people are living longer, we will need to plan for longer retirements. The Department of Labor suggests planning for a 30 year retirement to ensure you don't outlive your savings. What money will you need on hand to live comfortably for those years? Here are a few things to keep in mind when making your calculations:

1. Longevity & Health - You can estimate your lifespan based just on your birthday, but should also keep in mind factors such as family medical histories, existing medical issues, and your general health. If you have a serious medical condition, such as heart disease, the costs of long-term treatment should be included in your calculations.
2. Increased Costs Over Time - Inflation and rising health care costs mean that money saved today can have less spending power tomorrow. You will want to keep much of your retirement savings in accounts that offer a return on par with or exceeding the inflation rate.
3. Lifestyle - Replacing 75% of your income is often recommended when saving for retirement, but this also means reducing your annual costs below what they were before. Thinking of ways to reduce your spending can help you overcome the gap between any savings and your retirement needs.
4. Married Women - Because men have a lower life expectancy than women, many married women will spend a portion of their retirement as a widow. Couples should plan to provide for their retirement both jointly and in case of an untimely death.

There are several online calculators available that can help you estimate your costs and needs. The Department of Labor even provides an online calculator specifically targeted at workers who are planning for retirement later in life.

Start with What You Have

The first step to figuring out how much money you need to retire is determining what you have on hand right now. Calculate your existing assets such as cash, investments, property, and bonds. Include any money set aside in work-related retirement plans, like 401k's. This is all money that can be counted towards your retirement savings. Beware of relying too much on the value of your home, though. You will still need housing in retirement!

You can also look up what Social Security retirement benefits you will be entitled to. These will usually be able to cover a decent percentage of your monthly needs, often around 20%.

Selecting the Best Plan for You

There are many types of retirement plans. In addition to your Social Security benefits, you'll want to set aside money for retirement in plans such as a 401k or individual retirement plan (IRA). Most work-sponsored 401k's offer matching employer contributions. Under these plans, if you contribute a percentage of your income to your 401k, your employer will contribute the same amount to your retirement, up to a maximum level. It's recommended to maximize your 401k matched contributions. The rest should typically go to IRAs or other investments.

Be aware, though, that since 401k contributions are tax-deferred, there are limits to how much you can contribute. After 50, you are allowed to make greater "catch up" contributions beyond this level. You'll also want to consider the various rates of returns your savings and investments will get before you retire and the level of risk you're willing to accept. Diversifying your assets can help balance these risks and returns.

Making sure you and your loved ones are provided for in retirement can be a complex and daunting task, but it's not something you need to do alone. Consider contacting a financial planner or retirement attorney to discuss your needs and concerns.