(MONEY Magazine) – There are no mileposts on the road to financial freedom; it is up to you to figure out where you stand. If you plan to leave your job after age 50 but before you are 62, the worksheet on the opposite page will help you determine how much more you have to save to live the way you want. The annual earnings you think you will need after you stop working (line 1) should, like every other item in the worksheet, be stated in today's dollars; the various multipliers throughout it take the effects of inflation into account. Most people can live on less after they quit work: their taxes drop along with their income, they don't have commuting and other job-related expenses, they often move to areas where housing costs are low and, of course, they no longer have to save for retirement. Financial planners, therefore, generally advise that you need 60% of your salary after you retire, though there are plenty of exceptions to that rule. For example, ex-teacher Tim Foote, 59, and his wife Joanne, 54, a former school nurse and counselor, stopped working two years ago and do quite nicely on $15,000, only a quarter of their former salaries. When they dropped out, the Footes sold their home in San Rafael, an expensive San Francisco suburb, and used the proceeds to buy a house on three acres in rural Sonoma County, 65 miles away. Since moving to the country, the Footes have trimmed their food bills by frequenting a farmer's market and growing a wide variety of fruits and vegetables for their own table. Tim also jokingly declares that he won't need to buy any new clothing for at least 70 years. Bear in mind, however, that some expenses are bound to increase after retirement. For example, you will have to pay for health insurance and replace other benefits that your employer may now provide for you (see the story on page 95). And even if you move into a cheaper house, the monthly payments may be higher if you take on a bigger mortgage. In calculating how much you have to sock away to provide the annual income on line 1, the worksheet assumes that your savings will outpace inflation by four percentage points. That return is not unreasonable by historical standards, but you will have to invest the money in a diversified portfolio of stocks and bonds to attain it. If you insist on keeping your cash locked away in extremely conservative investments such as Treasury bonds, you will need to save more than the worksheet indicates. For safety's sake, the worksheet also assumes that your life span will be several years longer than actuarial tables would show. Mercifully, not all of the money you will need will have to come from personal savings. If you have a company pension plan, it will provide a portion. Pension formulas vary from employer to employer, but you can use rules of thumb to estimate yours. If you will have worked for the company 10 years, expect an annual pension starting at age 65 of about 10% to 15% of your salary just prior to retirement; after 20 years, you should receive 20% to 25% of your pay; and after 30 years, 35%. If you believe that your salary will grow at the same rate as inflation between now and when you retire, you can apply those percentages to your current pay to come up with the figure for line 5a of the worksheet. Workers who expect annual raises that will exceed inflation can fill in higher amounts. For more precise projections of how much you will be entitled to, talk to your benefits counselor at work. If you plan to retire before the age of 60, you may not begin receiving your pension for several years. Thus on line 5b you must choose a factor that corresponds to the date when the cash will begin to flow. In addition to your pension, you will be entitled to Social Security benefits once you reach the age of 62. Your annual Social Security benefit on line 6a will be the $15,120 maximum if you and your spouse both work and earn $42,000 or more each. If you earn $42,000 and your spouse's earnings are minimal, your benefits will be $11,340. If you are single and earn $42,000, you will get $7,560. Reduce those amounts by one percentage point for each year before 62 that you plan to stop working. Your benefits counselor should be able to help you make more precise estimates. Include on line 10 the current value of your Individual Retirement Accounts and vested corporate profit-sharing, 401(k) and savings plans. If you intend to move into a new home after leaving work, add in the equity you have in your current house minus an estimated down payment on your new residence. BOX: How close are you now? 1. Gross annual income you will need after you leave work 2. The sum needed to provide that income Divide line 1 by .057 if you will retire at 50, .063 at 55, .069 at 60 or .076 at 62 3. One-time transition costs, like moving expenses or capital to start a business 4. Total amount needed Line 2 plus line 3 5. Pensions a. Yearly benefit b. Total pension Multiply amount on 5a by 11.1 if your pension will begin at age 50, 10.7 at 55, 10.1 at 60 or 9.3 at 65. Then multiply that number by a factor from column A 6. Social Security a. Yearly benefit b. Total benefit Multiply amount on line 6a by 13.7. Then multiply that number by a factor from column A 7. Post-retirement jobs a. Estimated annual earnings from new jobs, part-time work, or other sources, not including your investments b. Total earnings during retirement Multiply amount on line 7a by 17.7 if you plan to leave work at 50, 16.3 at 55, 14.6 at 60 and 12.7 at 65. Then multiply that number by a factor from column A. 8. Money needed from savings Line 4 minus lines 5b, 6b and 7b 9. Amount you have saved already 10. What your savings will grow to by the time you stop working Line 9 times a factor from column B 11. Total additional savings you will need Line 8 minus line 10 12. Amount you will need to save each year Line 11 times a factor from column C Number of years between now and when you will begin receiving additional income Column A 1 .962 2 .925 3 .889 4 .855 5 .822 6 .790 7 .760 8 .731 9 .703 10 .676 15 .555 20 .456 ) 25 .375 Number of years between now and when you will stop working Column B Column C 1 1.04 1.000 2 1.08 .490 3 1.12 .320 4 1.17 .235 5 1.22 .185 6 1.27 .151 7 1.32 .127 8 1.37 .109 9 1.42 .095 10 1.48 .083 15 1.80 .050 20 2.19 .034 25 2.67 .024