# How to Calculate if You Have Enough Saved to Retire

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Some people recommend that people save 10 percent of their income each year they work for retirement. The prevalent thought is that as long as a person saves 10 percent of his income, he should be able to afford retirement. Although this is true for some people, for others it may not be accurate. If you have been saving for your retirement, you should do a thorough analysis of your finances before you decide to retire to make sure you have enough money. Online retirement calculators also can give you an estimate of the amount you need to retire.

Estimate how many years you may live during retirement. While estimating the date of your death may not be a pleasant thought, it is important to estimate how many years of retirement you need to fund. Consider family history and average life expectancy rates among those in the area where you live and those of your gender. Naturally, you probably need to save more if you plan to retire at age 50 than you would if you retire at age 65.

Calculate the monthly costs associated with affording basic needs in retirement. This includes insurance costs, medical fees, food bills, utilities and other essential payments. Many people no longer have mortgages when they reach retirement age, but if you are still paying a mortgage, calculate how much more you need to pay to estimate the cost of paying off the mortgage. Multiply the monthly amount you need to pay for essential bills by 12, then multiply it by the number of years you estimated to live after retirement.

Calculate the costs associated with things that you want to have or do as a retiree. Retirement should be a time to enjoy the fruits of your labors. These costs will vary depending on the retiree. Some people may want to buy season tickets to their favorite team's games, while others may want to take a yearly cruise. Estimate what the costs associated with your extracurricular retirement activities might be on a yearly basis. Then multiply this number by the number of years you hope to live past retirement.

Add the totals from steps 2 and 3 to get a general idea of the amount of money you might need during retirement. Remember that this is only an estimate. There is no way to fully foresee exactly how much you will need.

Add the totals of your sources of retirement income. These sources may include your 401(k), your employer's retirement pension fund, Social Security and other money you have saved. Add the total amount of money you expect to receive from these sources during the course of the years of your retirement.

Subtract the total in Step 4 from the total in Step 5. Generally speaking, if your answer is not in the negative, you have enough to retire. Practically, you don't really want these numbers to be close to each other. You should plan so that you have money to live several years longer than you think you may. Although Social Security and pension plans will continue to pay out throughout your life, 401(k) plans and other savings accounts will no longer pay out after they are depleted.

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