In your 20s, 30s, or 40s? The days when you’ll no longer need to work are decades into the future.

You’re likely busier worrying about your current financial goals, like traveling, buying a home, starting a family, or launching a business than you are about some far-off, distant time when you’ll kick back and enjoy your golden years.

And because that time is pretty far into the future, it’s really tough to figure out how much money you’ll need one day.

It’s tough to envision what retirement will look like or how much it will cost. No wonder it’s also tough to find the motivation to save for it!

But even when you’re in your prime working years, saving for your ideal future retirement should be a priority. Time is a huge advantage to have on your side, because compound interest performs best when you give it years and years to work for you.

Here are a few ways to figure out how much money you’ll need in retirement — and how to save toward that goal each month.

Think About What You Want

What comes to mind when you think about retirement? Is that vision something you actually want in your life, or are you using society’s definition to imagine what your retirement is going to look like?

The first thing you need to do in order to know how much money you’ll need in retirement is to understand what that actually means to you — what do you want your retirement to look like? What do you want to do, and where do you want to go?

The kind of lifestyle you want will have a big impact on the amount of money you need. Consider some of these variables and choices that could affect your financial needs:

  • Maintaining a large family home or downsizing to a low-maintenance condo
  • Traveling domestically versus internationally — or taking frequent trips versus spending time at home
  • Spending your time volunteering and working in your community or treating yourself to hobbies that cost money (like golf or other activities)
  • Continuing to find ways to earn income from part-time work, small gigs, freelance or business activities versus relying solely on your savings for the money you need

For some people, the idea of quitting all work entirely sounds awful. You may continue to work and earn some amount of money, which means you could get away with a smaller nest egg.

Others want retirement to be full of luxury travel and completely work free. There’s nothing wrong with that — but it means having more money in the bank to finance that kind of retirement lifestyle.

Imagine Your Retirement Budget

Once you understand what kind of life you might want to lead in retirement, you can estimate some of your expenses. Create a mock budget that includes the costs you know you’ll need to take care of — from living expenses to discretionary spending like travel and treating the grandkids.

No, this budget won’t be complete, perfect, or 100% accurate. But it will give you an idea of how much retirement will cost you on a monthly basis.

Here’s a quick example:

  • Housing: $1,500
  • Other Living Expenses (Utilities, Cell Phone, Internet, Transportation, etc): $1,000
  • Healthcare: $500
  • Food: $800
  • Entertainment: $250
  • Travel: $500
  • Hobbies and Activities: $250
  • Cash Savings: $200

If this is your budget, you could plan to spend an average of $5,000 per month, or $60,000 per year. Assuming you retire at 63 and live until 90, you need to plan for 27 years of these expenses — which means you’d need $1,620,000 in retirement.

Of course, this doesn’t take inflation into account or a number of other factors that could drive that number up or down. But it does get you in the ballpark.

Use Rules of Thumb

If you’re just not sure what you want in retirement, you could use a common rule of thumb to understand how much money you’ll need instead.

Here are some popular ones:

  • Multiply by 25: Start with how much money you’d like to have each year in retirement, then multiply that number by 25. That’s how much you’ll need in total. So if you want to have $75,000 per year, you’ll need $1,875,000 saved for retirement.
  • 4% Rule: This allows you to work backward to determine how much you can spend in retirement. It assumes you can reasonably withdraw 4% of your wealth per year in retirement. So if you’re on track to have $1,500,000 saved by the time you retire, you could spend $60,000 per year (1,500,000 x 0.04).
  • 12 Times Your Salary: For a very quick estimation, assume you need 12 times your ending salary to retire. So if you made $120,000 per year before you retired, you’d want to make sure you had $1,444,000 in the bank before you officially called it quits. (The problem here, of course, is that you may have no idea what you’ll make in the years before you retire.)

Work with Your Financial Planner

Don’t want to rely on your own estimations? Working with a fee-only, fiduciary financial planner can help you hone in on some of the details.

Many advisors use financial planning software to make projections based on a huge number of factors — and can take inflation and other issues into account, too.

The number they give you will still be an estimate, but it may be more accurate than the numbers you come up with on your own. Plus, your planner will help you, well, plan!

An advisor can break down that big chunk of wealth into manageable, achievable pieces and show you how to save a little bit each month — and where to put it — to grow your nest egg so you can enjoy the retirement you want.