The first step when planning for retirement is to take an accurate snap shot of where you are today financially. You cannot effectively determine how to get where you want to go, without determining where you are starting from. Next, define the annual amount of income you will require during retirement to live comfortably and to achieve your retirement goals. Subtract from this figure any pensions, annuity income streams or other income sources you or your spouse may have available during retirement. The difference between these two numbers is what you must make up through personal savings. The amount of personal savings you must achieve annually to fill the gap will be dependent upon the time frame and your risk tolerance. If you cannot save enough to achieve 100% of this gap, you may need to make adjustments to your retirement goal; age of retirement, annual income received during retirement, saving more until retirement or increasing the amount of risk you are willing to take within your investment portfolio.
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