Ameriprise Abney Associates

You know how important it is to plan for your retirement, but where do you begin? One of your first steps should be to estimate how much income you'll need to fund your retirement, Abney Associates Team A financial advisory practice of Ameriprise Financial Services, Inc.. That's not as easy as it sounds, because retirement planning is not an exact science. Your specific needs depend on your goals and many other factors.

USE YOUR CURRENT INCOME AS A STARTING POINT

It's common to discuss desired annual retirement income as a percentage of your current income. Depending on who you're talking to, that percentage could be anywhere from 60 to 90 percent, or even more.

The problem with this approach is that it doesn't account for your specific situation. If you intend to travel extensively in retirement, for example, you might easily need 100 percent (or more) of your current income to get by.

PROJECT YOUR RETIREMENT EXPENSES

Your annual income during retirement should be enough (or more than enough) to meet your retirement expenses. That's why estimating those expenses is a big piece of the retirement planning puzzle. But you may have a hard time identifying all of your expenses and projecting how much you'll be spending in each area, especially if retirement is still far off. To help you get started, here are some common retirement expenses:

- Food and clothing

- Housing: Rent or mortgage payments, property taxes, homeowners insurance, property upkeep and repairs

- Utilities: Gas, electric, water, telephone, cable TV

- Transportation: Car payments, auto insurance, gas, maintenance and repairs, public transportation

- Insurance: Medical, dental, life, disability, long-term care

- Health-care costs not covered by insurance: Deductibles, co-payments, prescription drugs

- Taxes: Federal and state income tax, capital gains tax

- Debts: Personal loans, business loans, credit card payments

- Education: Children's or grandchildren's college expenses

- Gifts: Charitable and personal

- Savings and investments: Contributions to IRAs, annuities,