Most of us are saving for retirement, but how big of a nest egg will you need at retirement? People save and invest in 401(k) plans and IRA accounts but have you calculated how much you need at retirement to live comfortably?

How do you calculate how much you will need? What factors do you include in your retirement calculations such as rate of return, retirement age and how long you expect to live in retirement. How important is retirement saving versus maintaining your current lifestyle?

Here is a link to my favorite Retirement Planning Calculator from Bloomberg. It's an easy to use tool and is great in calculating your magic number. You just need to provide a few inputs such as what percentage of your current income you would like at retirement, rate of return before and after retirement.

I like to run the calculator with an 8% investment return before and after retirement, exclude Social Security and select 100% of income at retirement. Click on “View Report” to see a nice chart showing your expected retirement balances.

I have calculated how much we will need at retirement and come up with around $2M as the amount of our nest egg to retire comfortably. Depending on how much we save currently and how well our investments perform I should be able to retire somewhere between 60 and 63 years old.

Right now we are well on our way to our goal of $2M and here is how I got started on my goal toward retirement.

I started a 401(k) plan at my first job out of college. I was able to contribute 10% of my salary and my employer added 15% as a profit sharing arrangement. This 25% contribution went a long way towards getting my nest egg build up during my nine years of work at that company.

I currently work for a non profit that offers a 401(k) with no matching and variable annuities as the investment options. I do not contribute to this plan but I put the maximum allowed in a Roth IRA which I invest in the Vanguard LifeStrategy Growth Fund.

I also contribute money to about 25 dividend stocks. I plan on growing the dividend stocks to produce anywhere from a third to half of what I will need in retirement. Currently I am earning more than $6,500 in yearly dividends from my stock portfolio.

So make sure you calculate how much you will need in retirement and come up with a plan that works for you. Spend some time now on planning your retirement so you will be in good shape twenty to thirty years down the road.