In the longest-running study of retirement preparedness, one of the most stubborn numbers over the years has been the percentage of current workers who have tried to figure out how much money they will need to have saved in order to live comfortably in retirement. According to the Employee Benefit Research Institute (EBRI), that figure has stayed at or below 50% since 1993 with only one exception. The latest study found that just 47% of today’s workers have taken that step.

While financial planning is an imprecise science, it offers several important benefits. For one, estimating how much you may need to have accumulated by retirement will help you figure out how much you need to invest each month in order to achieve that goal. Knowing that number can be a motivator to find the money to invest. Another benefit is that planning can provide peace of mind. Moving through life not knowing how your day-to-day cash flow management may impact your future is stressful. On the other hand, taking proactive steps to manage how much you’re spending on groceries, vacations, and all the rest in order to free up money to invest for your future can be reassuring.

Following through

To run some estimates, a good starting point is to use one or more of the freely available online planning calculators, such as Fidelity’s simple, broad-brush Retirement Score or its more detailed Planning & Guidance Center.

Even better, use a more sophisticated tool such as Envestnet MoneyGuide, which includes the capability to evaluate various what-if scenarios. Its list of common risks is helpful in preparing for potential problems that might not otherwise have been on your radar screen. For a one-time $50 fee, SMI Premium members can gain access to MoneyGuide for the life of their membership. Go to and click the “Special Promotions” button in the center of the page. If you plan to use MoneyGuide, this article will walk you through the steps to get started.

As you put a plan together, make sure it isn’t dependent on everything going perfectly right. Instead:

  • Use realistic stock market performance assumptions. The closer you get to retirement, the lower your rate-of-return assumptions should be.
  • Use an earlier retirement date than your ideal retirement date. According to EBRI, nearly half of today’s retirees retired sooner than planned — some because they could afford to, but many because they had to due to their health, the health of a loved one, or a layoff and the difficulty of finding a new job.
  • Do your best to weigh the risk of having to cover significant healthcare costs (do you have a family history of dementia?) and consider how you would cover such costs.
  • Give serious consideration to the possibility that an aging parent or adult child will need financial assistance.
  • According to the Society of Actuaries, the two most common retirement shocks are unexpected costs related to home repairs and dental work.

Have you run the numbers on your retirement? If not, this year is a good time to start. If you have, given the many changes each year brings — from differing stock market returns to changes in your personal circumstances or goals — it would be wise to update your plan each year.