Retire by 65: How much do I need to save?

(MONEY Magazine) -- Is there a way to calculate how much I would have to save to retire at age 65? -- Joann, Davie, Fla.

There may be a shortage of jobs, thriving housing markets and decent investment returns these days, but there is absolutely no dearth in ways to estimate how much you need to save to retire at 65, or any age for that matter.

If you want to know the total amount of money you will need to have sitting in 401(k)s, IRAs or other retirement accounts by the time you hit 65, you can check out a calculator like our Retirement Planner.

Just plug in information like your age, current salary, the percentage of your current income you think you'll require to live comfortably in retirement (typically 80% or so), and voila! You'll not only get a projection of what size nest egg you'll need both in today's and future dollars, but your probability of hitting that target.

If, on the other hand, you want to know what percentage of your pay you should set aside in retirement accounts each year to have a decent shot at a secure retirement by your 65th birthday, you can go to our aptly named "What You Need To Save" calculator.

Here, you simply enter your age, income and how much you've already got salted away in retirement accounts, and you get an immediate estimate of the percentage of salary you should save each year to be able to retire at 65 on 80% of your pre-retirement income.

These two calculators are specifically designed to give you a quick down-and-dirty assessment of what you must do to retire on the timetable you've set. There are others, however, that can give you a more nuanced look at your chances of reaching your goal.

Will my retirement savings last?

For example, T. Rowe Price's Retirement Income Calculator, Fidelity's Retirement Quick Check and Vanguard's Retirement Income Calculator allow you to try out a variety of different savings rates, investing strategies and retirement dates when making their projections. This kind of flexibility is valuable because you get to see how making a change (saving more, investing differently, delaying retirement a year or two) might improve your retirement prospects.

It's important to keep in mind, though, what you're getting when you go to these or a similar online tool. You're getting an estimate, not a guarantee. As I noted in a previous column, even the most sophisticated calculators can't predict the future. There are just too many unknowns -- how the economy will fare, how the markets will behave, how you and other investors will react to the economy and the markets -- to make precise prognostications.

At best, a good calculator can show you the probability of achieving your goal based on its assumptions about the economy, the markets and the interplay of different types of investments. So no matter how precise a figure you may get -- a nest egg of $654,783, a savings rate of 12.2%, whatever -- think of it as a general target, a guideline.

Best new tools for planning retirement

Think of it as a moving target, too. Depending on such factors as how your salary changes, how your investments fare over time, whether you're whittling down debt as you approach retirement or taking on more, the amount you may need to accumulate and how much you need to save can shift over time.

So you don't want to come up with a projected nest egg or savings rate estimate one time and then just focus on that figure. Rather, you should re-do the analysis periodically -- say, every one or two years -- with your updated financial information.

By doing this, you'll be able to see whether you're on track toward your retirement goal. Better to know early on if you're backsliding, as the earlier you make adjustments, the better your chance of being able to retire on the schedule you envision.

Finally, given the fact that, by their nature, the projections you'll get from retirement calculators are squishy at best, it makes sense to build a safety margin into your planning. The most effective cushion: saving more.

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As yet another calculator shows, throwing an additional percent or two of pay into your 401(k) or another couple of hundred bucks a month into an IRA or other retirement account can significantly boost the potential size of your nest egg. Just as important, extra savings can provide a buffer against setbacks ranging from lower-than-expected investment returns to disruptions to your savings regimen due to a layoff.

So by all means check out one or more of the calculators I've mentioned here. And after you've gotten a sense of where you stand now and what you must do to be able to retire at 65, keep checking in every year or so and make any adjustments necessary to stay on track.