Any long-term financial planning must start with Your Number.

Your Number is the amount of money you want to retire with on a specific date.

For example, if you want to retire at age 72 with $2.3 million dollars, you need to earn and save $2.3 million by your 72nd birthday. What is that date?

If you want to save $250,000 to start a restaurant, you don’t need a date, but if you don’t set a specific deadline, you can wander aimlessly, changing your goals each years and never reaching your goal.

Your Retirement Number

Calculating your retirement number is fairly easy thanks to online retirement calculator tools and Certified Financial Planners.

You start by deciding how when you want retire and what you would like for annual income to live the lifestyle you want. You choose that income level based on today’s dollars, but create a plan that adjusts for inflation.

For example, if you want to retire a few years earlier, say at age 60, and live on an annual income that’s equal to $60,000 in today’s dollars, you can use a calculator to determine how much money you’ll need to have when you reach age 60.

The calculator will ask you:

• How much cash do you currently have?
• How much equity do you have in your home?
• How much do you have in retirement accounts (401(k), IRA, mutual fund).
• What will your monthly Social Security income be.

Once you put that information into the calculator, it will generate the amount of money you’ll need to save each month or year until your 60th birthday to earn an annual income from your investments that equals $60,000 today.

Here’s a simple investment (not retirement) calculator.

What you’ll see is that if you invest $100/mo. from the time you’re 22 to the time you’re 62 and you earn 7% annually, you’ll end up with $247,154.20 (or $199,154.20 on $48,000 in contributions).

If you wait until you’re 32 to start making your contributions, that 10-year lag will cut your number in half, earning you only $116,945.26 (or $81,000 on $36,000 in contributions).

Meet with a CFP

Free online retirement aren’t the best for creating a very accurate number and plan, but they can give you a very good start. To accurately calculate your retirement number, meet with a Certified Financial Planner who has all of the latest software for projecting market returns, compound interest, etc., and who will ask you a few more questions about your personal situation.

• For example, do you want to pay for your kids’ college?
• Do you have an emergency fund?
• Are you trying to pay down student loan or credit card debt?
• Are you saving for a mortgage down payment?

Whether you are looking to retire at a standard IRS retirement age, hoping to retire early, or want to save enough to start a small business, you need to know Your Number.