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Best for Last

Retirement might be easy, but it's not free--it takes some serious saving. How much exactly? That's the million-dollar question.

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Plenty of personal finance books are published each year, and most fail to gain much traction--which is fine, since the best financial advice tends to be boring old stuff you've been told before anyway. Former Lands' End Inc. executive Lee Eisenberg, though, broke through the din this year with The Number: A Completely Different Way to Think About the Rest of Your Life. The book's central conceit is a question: How much, exactly, do you need in retirement savings before you can quit your day job? Entrepreneurs pondering early retirement might be interested in the answer.

To be fair, Eisenberg spends most of his nearly 300 pages attempting to convince readers that The Number should be the starting point--rather than the end goal--of any retirement plan. And he's right that the most fundamental thing is to think about the kind of retirement you really want to have: The amount of retirement savings you'll need varies according to the answer. But Eisenberg and others can say that till they're blue in the face. What people really want to know, and the one thing they'll remember, is their number.

So how do you calculate yours? The best way is to see a fee-only financial planner and have him or her draw up a strategy for you. At the other end of the spectrum, you can go online to any of the dozens of good retirement calculators, such as the "ballpark estimate". The middle option is to take a prefab worksheet--online or otherwise--and spend some time with it. Check out the embedded assumptions, and come up with a custom fit that matches your circumstances. Are 3 percent annual returns during retirement too small for your portfolio? Tweak it. The actuarial tables don't match your family's typical life expectancy? Adjust that, too. Withdrawing 4 percent a year sound too aggressive? Reduce it.

What you shouldn't do is make all your assumptions best-case scenarios so that the likelihood of them all working out is low. Be conservative, give it your best shot, and take it for what it is. Remember, it's only a number.

Scott Bernard Nelson is a newspaper editor and freelance writer in Portland, Oregon.