Whether it is five or 25 years away, many of us share the same nagging question about retirement. How much money will I really need? Geri Pell, a senior financial adviser for Ameriprise, says the answer depends on where you live and what type of retirement lifestyle you hope to have. U.S. News asked Pell for some strategies to help figure out your retirement needs. Excerpts:

How do you know if you're saving enough for retirement?

Most people don't know. The only way you can know is by figuring out what kind of retirement you want and how much money you will need. Many people are feeling very out of control and people have more doubts and more fears. Sitting down and making decisions and developing a plan takes so much stress away from people.

What needs to be factored into your calculation?

One of the things that is very useful to do is figure out what you are going to spend in retirement. Consider what kind of lifestyle you want in retirement, inflation, what your risk tolerance will be now and in retirement, what rate of return you might assume on your assets, and how long you will work. Also, do you have a pension? How much will you get from Social Security? Will you take on a second job or do some consulting?

How do you figure out what your risk tolerance is?

The big overall question about risk tolerance is, for you personally; would you rather sleep comfortably every night and at the end of 20 years have a 5 percent rate of return or have some bumps in the road and possibly get an 8 percent rate of return that is not guaranteed? People will answer that question differently depending on what cycle the market is in. It's almost like a doctor diagnosing what your real health condition is. If we get it right you will be a good investor.

There is an enormous amount of psychology involved. We've all come to understand how wide the market swings can be. If you know that an 80/20 mix can go down 40 percent and you can't live with that, maybe you have to switch to a different mix. And then you need to understand that you are limiting the up side as well.

What span of time should you estimate you will live?

I usually start off using 95. You get a lot of different reactions from people, but life spans are expanding. If you plan for 80 and live until 87 you can't come back to me and say I ran out of money. You need to plan for longer than you think you will live.

What percentage of your salary should you aim to save?

If you have children in college or in private school you might aim to save 10 percent of your income. But in the time when the kids are out of the house and before you retire you may want to bump that up to between 20 and 25 percent. It really depends on your situation. You should always save in your 401(k) at least up to the company match. You certainly need to be saving enough money to have a cash reserve for emergencies.

Is $1 million enough to retire comfortably?

For a modest retirement in most places in the country that may be enough money, but it probably would not be enough money in San Francisco or Los Angeles or New York City. For example, $1 million could produce about $40,000 a year. And then if you get $20,000 from Social Security that would be $60,000 without any other income.
 
There are people in retirement who spend only $3,000 a month because they don't have a mortgage, they have a low cost of living, and they go to the early bird specials. If before you retire you are earning $200,000, then you might have to downsize a little bit.

How can you keep your nest egg safe after you retire?

The most important thing is to get your emotions under control and not make decisions based on emotions. When the market is going up people can't wait to throw money in and when it's down people pull their money out. In life there are things we can influence and things we can't do anything about.

What I tell clients is that there are only four things you can control about your financial picture: how much you spend, how much you earn to an extent, your emotions, and what you do with the money that you have. You can't control the market, but you can control the decisions you make about the money that you have.

What should a baby boomer who wants to retire soon do to get back on track?

You have to think about what is more important, retiring soon or retiring well. It may not be realistic for you to retire at 58 with the lifestyle that you want and make it to 95. Now you have less money than you thought and maybe not even much job security.

Some of us baby boomers all grew up with really unrealistic expectations of when we were going to retire, and we planned in a way that didn't bear fruit. But what if I told you, you could still go to Hawaii, but you can't stay at a luxury hotel? Most people say, "I can do that." You have to adjust your expectations.

Or you may have to work until 62 even though we planned for 57. Let's reframe what we are going to do. Everyone around you is also going to be spending less money. The day of the $14 cosmopolitan is over. And who felt comfortable doing that anyway?

Copyrighted, U.S.News & World Report, L.P. All rights reserved.

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