Am I saving enough to retire with $2 million?

(Money Magazine) -- I'm 39, single and earn a good salary. I save about $2,000 a month in a retirement account and another $2,000 in a regular mutual fund. I cut coupons and buy on sale, but I also take trips with friends and family and treat myself to a little luxury every year for my birthday. I'd like to retire with $2 million at age 65, then travel and teach some college courses. Am I on track? What else should I be doing? -- Beverly W.

I like your attitude toward preparing for retirement. You seem to have your spending under control and you're saving and investing on a regular basis. But you're not obsessive about it. You're also making it a point to enjoy life now.

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Ultimate Guide to Retirement

• Getting started
• 401(k)s & company plans
• Investing
• Annuities
• IRAs
• Self-employment plans
• Pensions and benefit plans
• Social Security
• Insurance
• Estate planning
• Living in retirement
• Getting help

It's important to strike that balance. After all, what's the good of having lots of dough in retirement accounts that will support you comfortably in the future if building that nest egg requires you to live like an ascetic during the prime of your life?

Of course, not everyone has the luxury of being able to sock away $4,000 a month in savings. Most people don't earn nearly enough to save anything close to that.

That said, there are always ways you can improve.

Let's start with that $2 million figure you mention you'd like to reach at age 65.

If you continue putting away $4,000 a month, you have a very good chance of hitting the $2 million mark or better by the time you're 65. Even a relatively modest return of 6% a year would give you almost $3 million over the next 26 years (although that doesn't make any allowance for taxes).

What I wonder, though, is what this $2 million target really represents. Is it an off-the-cuff estimate of what you'll need? Or is it based on a fairly rigorous analysis? And when you say you'd like to retire with $2 million at 65, have you considered what the purchasing power of $2 million in 26 years will be compared with $2 million today? Even if inflation moves along at a relatively subdued pace of, say, 2% a year, $2 million in 2037 would be able to buy about what $1.2 million buys today.

So one thing you might start doing is getting a clearer sense of how much money you'll actually need once you retire -- and then measure your progress periodically to be sure you're on track.

You can do this yourself by going to a robust online retirement calculator like our Retirement Planner or T. Rowe Price's Retirement Income Calculator. You enter such information as your income, how much you've already saved in different types of accounts, how much you're planning to save, the age at which you think you'll retire and an estimate of how much income you'll need in addition to Social Security and any pensions. And you come away with an estimate of your odds of reaching your goal.

Clearly, this will be just an approximation. A lot of things can change over the next two to three decades, many of which (such as the performance of the financial markets) are beyond your control. (Even your ability to continue your current rate of savings isn't entirely within your control.)

But once you go through this exercise, you can measure your progress from year to year, and also see how making changes to your plan (saving more or less, retiring sooner or later, investing more conservatively or aggressively) affect your odds of success.

If you don't like the idea of doing this sort of assessment on your own, you can always hire a financial planner or work with a financial services firm to create a retirement plan. For example, well-known firms like Fidelity, Schwab, T. Rowe Price and Vanguard all offer some type of advice or guidance.

While you're doing this sort of evaluation, you'll also want to make sure that you're investing that $4,000 a month effectively. Generally, someone your age should still be investing primarily for growth to bulk up that nest egg, which means putting most of your retirement savings into stocks for capital appreciation and the rest in bonds that can provide income and some stability.

But the exact mix of stocks and bonds that's right for you will depend not just on your age, but factors such as how comfortable you are seeing your retirement portfolio's balance bounce around and what other resources you have to fall back on.

As a starting point for creating a mix of stocks and bonds that's right for you, you can check out the asset allocation targets for the target-date retirement funds for someone your age at T. Rowe Price and Vanguard. You can then go to Morningstar's Asset Allocator tool to get an idea of how their current allocations might perform. Again, if you're uneasy about doing this on your own, you can consult an adviser.

There will be other areas you'll want to look into as you get older, such as deciding whether you need to buy long-term care insurance. But for now, I think you mostly want to consider the suggestions I've outlined here, and then keep doing what you're doing -- i.e., saving for the future while enjoying life today.