NEW YORK (Money) -- Question: I'm twenty-two years old and earn $45,000 a year. Based on the percentage of pay I contribute to my company savings plan (25%), the company match (6%), my projected salary growth (4% or more a year) and a decent investment return (about 10% this year), I estimate using my 401(k) calculator that I'll end up with about $5 million dollars by the time I want to retire at age 59.

I can't possibly see how my estimate would let me down, but I am wondering whether this amount will be enough to support me some 37 years from now. I'd appreciate your thoughts. - Graham, San Diego, Calif.

Answer: Well, my first thought is that you certainly appear to be right on top of the two most important things one must do to plan successfully for retirement. You're getting an early start and you're socking away big-time bucks into that 401(k). Those two moves alone vastly increase your odds of having a nest egg large enough to support you comfortably in retirement.

That said, I get a little concerned when you say things like "I can't possibly see how my estimate would let me down."

Let's not forget that we're talking about a 37-year forecast here, over which time a lot can change. It's important that you realize that, even though you're off to a great start, it's not as if that at age 22 you've got this retirement planning thing nailed, story over, mission accomplished.

I'm not saying things will unravel, but let's take a look at a few reasons why the results that are spit out by some calculator today might not materialize down the road.

Take that 25% contribution rate. It's terrific. But it's possible you might not be able to keep it up. Why not? Well, marriage and kids are just two reasons.

I'm glad to see you getting that 6% match, but who knows, maybe your next employer won't be as generous.

And while a 4% annual salary increase over a career is certainly attainable, it's also possible you might not do so well, or that you could see periods of time when your earnings are interrupted because of a layoff or because you go back to school for training or an advanced degree or because you just need some time off to evaluate your life.

There are plenty of other possible obstacles. The markets might not provide generous returns. You might have to dip into your retirement assets for medical expenses. There may be years when you can't afford to sock away 25% for any number of reasons.

And even if your 401(k) calculator's projections are right on, that doesn't guarantee you'll be ready to retire at 59. Let's say you accumulate that $5 million nest egg.

That translates to an annual income at retirement of between $200,000 and $250,000. (I'm assuming you would withdraw that amount the first year of retirement and then increase that amount for inflation each year to keep your purchasing power constant.)

But that's $200,000 to $250,000 in 2043 dollars, which are going to buy you a lot less than today's dollars. If you assume inflation of about 3% over the next 37 years, you're really talking about an income of roughly $70,000 to $80,000 in 2006 terms. That may very well be more than enough, especially if you add Social Security to it.

Then again, maybe Social Security won't be as generous 37 years from now as it is today. Or, if you're really successful and end up living a grand lifestyle prior to retirement, perhaps you'll need more than $80,000 in today's dollars to support you in the style to which you'll have become accustomed.

Okay, so now that I've convinced you (I hope) that you've got to allow for a wide margin of error and uncertainty with even the most sophisticated calculators, how should you factor all this into your retirement planning?

I see three main ways:

Build in a cushion. However much you may think you out to save to reach a retirement (or a calculator says you need), try to put away a little more to guard against unexpected setbacks.

Now, in your case, with a 25% annual contribution I think you're probably already building in a decent cushion. But this is something for you to think about in the future should your savings habits change. And it's also something for all you readers out there who aren't exactly taxing yourselves on the savings front to think about.

Don't assume your nest egg's value is "locked in." Many of us look at the balance in our 401(k) or other retirement accounts and think of this as an amount we have, as if it's cash sitting in the bank.

If you're invested in assets like stocks and bonds, however, that's not the case. If the markets hit some turbulence, that balance may decline, in some cases precipitously so, as many people on the verge of retiring in early 2000 found to their dismay.

I say this not because I think everyone should move their retirement money into money-market funds or CDs. That would be a mistake since most of us need that money to grow, even if we're retired and have begun drawing on our savings. Rather, if you're still saving for a retirement that's many years in the future, you shouldn't get the feeling that you've accumulated enough so that you no longer have to sock any more away. A market slide can quickly knock your nest egg from the "more than enough" to the "barely scraping by" category.

Re-assess your progress from time to time. A retirement plan isn't something you can create and then set on autopilot for 10, 20 or 30 years. Too many things can happen to change your prospects for a secure retirement.

So every couple of years at the very least you want to re-evaluate your situation. Are you on track toward accumulating a large enough nest egg to live on? Do you need to save more? Invest differently?

If you're handy with online calculators, maybe you can do this on your own. Many retirement plans now offer access to sophisticated calculators (i.e., ones that use Monte Carlo or other simulation techniques to factor variability into its estimates as opposed to just compounded out numbers year after year), as do many investment firms and a few sites online (to try our Retirement Planner, click here).

If you'd just as soon have root canal without anesthesia than rev up a retirement planning calculator or software, then you should consult an adviser to help you with this assessment. (See tips on choosing an adviser)

But no matter how good a start you're off to, don't ever assume that your estimates are a lock. Better to do a reality check every few years and make adjustments as necessary than to figure all's going well only to find on the eve of retirement that your best-laid plan somehow went awry.

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