Online retirement calculators want you to include inputs you may not have, only tell you how long your money will last, don't actually spit out a target dollar amount, and in some cases, won't share anything with you unless you sign up. I've tried a few out. Don't take me wrong, there are a lot of great articles to reference. Google: How do I calculate my retirement number. My favorite of all articles on page one is provided by thesimpledollar.com because you get a step-by-step approach.
Why I decided to blog about this today is because recently I was asked to answer: "How much money do you personally need to retire, and how did you come up with that number?" for an upcoming article at a financial site. (When it's live I will let you know). Below is my answer. It may not be accurate, meaning I may be missing some things as I did this without any feedback from CPAs or financial professionals. Nonetheless, my methodology is explained and it could help you out with this same problem of wanting to know your number but not having a way to actually compute it.
Well, you can see that my reasoning includes factoring in how long I need our money to last, inflation, when I expect to retire, how much income I'll need each year adjusting for inflation every year, where I plan to retire, and so on. I had to think hard about this. What could alter my actual retirement number?
For starters, inflation may average 2% and not 2.5% over the course of my lifetime, or who knows...maybe even more and that wouldn't be good. I may die sooner than 90. I mean, I can go on forever. No one can predict everything that will happen in the future. But...at least I have a target retirement number to shoot for. I plan on downsizing for sure (two people won't need 5 bedrooms) so renting or living in a tinier home (this will depend on the economic cycle) will surely mean we'll need less to retire comfortably on.