Guest Author - Cate Brizzell

Do you have a plan for retirement? Do you have any idea how much money you'll need when you retire? Do you even know when you'll retire? How much should you be setting aside now and how should you be investing it?

According to the Employee Benefits Research Institute, half of American workers have yet to calculate how much retirement savings they'll need during their golden years. Out of that half, nearly 77 percent are just "guessing".

Yet, the happiest and most financially secure retirees are the ones who calculate their needs, set retirement goals, and put savings and investment plans into action during their working years.

If you think you need a finance degree or high-powered financial advisor to get it right, think again! Below are simple steps you can follow. Don't forget to check the links to helpful internet retirement resources at the end of the article.

Decide when you'd like to retire and estimate how long you'll need retirement income. Pick a date to begin your planning. Retirement used to be age 55, but now it's closer to 62, 65 and 67 years of age. For those born in recent years, full Social Security won't kick in until age 67. Also keep in mind that most 401(k) and 403(b) plans won't let you withdraw your money before age 59 1/2 without penalty. So, a safe age to start is probably 62. From there, estimate how long you'll need to draw down retirement income (okay, so this is a bit morbid). Will you live 10, 20 or 30 years into retirement? My husband's family lives into their late 90's, so there's a pattern of longevity we need to take into account. Today's elderly have better medical care and live longer into their 70's and 80's. Estimate conservatively to make sure your money doesn't run out.

Calculate how much income you'll need each year when you retire, in today's dollars. This can be a little tricky. If you don't already have an idea how much you spend each month, quickly figure it out. Your checkbook, credit card statement and/or finance software can help you do this. Then, go through your expenses and delete anyway that won't be part of your retirement spending. In my case, all those dance class tuition bills will be long gone! Next, delete any debt payments that will be paid off by your big day. Mortgage gone? Home equity paid off? Realistically assess what your debt load will be. Finally, try to estimate what your basic living expenses will be. Will you be living in a smaller house with lower utilities? Paying rent? Paying maintenance fees? Supporting a hobby, such as golf? Instead of seeing this as a tedious exercise, have fun planning what you'll do with all that extra leisure time. Will you pick up a part-time job you love? Volunteer? Finally get that zippy sports car?

Using your retirement age, longevity and needed annual income, calculate how much you'll need to have saved by retirement. Use online calculators at www.bankrate.com or www.smartmoney.com to help (see links at the end of this article). The type of retirement savings you're using will make a difference, so ensure this is being taken into account. For example, Roth IRA income is non-taxable upon withdrawal, versus 401(k) and traditional IRA income fully taxable at withdrawal. That can make a big difference in terms of how much you'll need to save each month now.

When you're done with this step, you have your retirement goal in hand.

Calculate how much your current savings and investments will provide at retirement. Take stock of what you've already saved and what you're currently setting aside each month. Use those online calculators again.

Compare what your current savings will bring at retirement versus what you'll need. This is the crucial step. Are you saving enough? If not, you can take a few steps to bring your savings in line. You can save more, retire later or reduce your retirement expenses. A combination of all three may be most effective. If you're already saving enough, congratulations! Keep going with your plan.

Annually assess your retirement goals and progress. Life can always get in the way, so you need to be on top of how you're doing. Laws can change, particularly in regards to taxes and retirement vehicles. Make sure you're aware how those changes will impact your retirement. Did you have to pay more for college tuition than you thought, reducing your Roth IRA balance? Take it into account. Did you pay off your mortgage sooner than you thought? Are you moving to a cheaper part of the country to be closer to your kids? If you're adjusting your goals and savings annually, you stand a much better of chance of achieving your goals without major changes in saving or spending.

Ignoring the inevitable never works. All it does is guarantee anxious moments, and forces you to rely on luck for retirement security. Given the fact you may have to live 15 to 30 years on retirement savings, doesn't it make sense to take a few moments and make sure you're on track?