How much do you really need to retire?

Ask ten people how much you need to retire and you'll hear ten numbers. That's because there isn't one answer. There's your answer.

Start with spending, not savings

Estimate what you'll actually spend each year in retirement. Many people spend less on commuting, work clothes and saving, and more on travel, hobbies and health care. Your current spending is a reasonable starting point.

Subtract guaranteed income

Government pensions, workplace pensions and any annuities reduce how much your savings must cover. In Canada, look at your estimated CPP and OAS. In the U.S., check your Social Security statement.

Turn the gap into a target

The gap between your spending and your guaranteed income is what your savings need to provide each year. A common rough rule suggests that withdrawing about 4 percent of your savings in the first year, then adjusting for inflation, has historically lasted around 30 years. Divide the yearly gap by 0.04 for a ballpark target.

It's only a starting point. Markets, inflation, health and how long you live all change the picture.

What you can control

• How much you save, and how early you start
• What you pay in investment fees
• When you retire. Even a year or two makes a big difference
• Using tax-sheltered accounts well

A rough plan you revisit every year beats a perfect plan you never make.

A fee-only financial planner can turn your estimate into a full plan.