This is a good tool I suggest you try out. It only takes a few minutes.

http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp

You answer a few questions and it will give you an overview of your cash flow from now through retirement. It will also tell you how much you need to have saved up and what type of return you need on your current savings to achieve that.

It is suggested you need 80% of your income when you retire. I ran some basic numbers through for myself and this is what I found:

• To live at 80% of my current lifestyle I will need a nest egg of almost $2 Million
• My current savings plan will allow me to live for 1 year of retirement
• I would need a return of 15% my entire life for my current savings to be effective
• A reasonable rate of return would require me to save an additional 30% of my pay check

This assumes that:

• Social Security will be available when I retire
• I get a 3% raise every year. (My past 5 years average out to less than 1%)

And all of this depends on my job which brings up another issue.

Life insurance covers your family if something were to happen to you. But what are you going to do if you loose your job? Your job is a single point of failure in your finances. You could work additional jobs but there is only so much one person can do. Perhaps we should take a page from Robert Kiyosaki and Robert Allen. Start creating multiple streams of passive residual income.

Passive residual income occurs over and over from work done one time and it does not continue to need much (if any) of your own personal involvement. Passive income comes from areas like rental property, network marketing, royalties, ... The idea is to build multiple assets that create streams of income so that when one asset fails your whole financial structure doesn't collapse.

This concept has an additional impact besides stabilizing your income. You now become one of your assets. One that is known to fail when you retire. Now instead of just saving for retirement, retirement is a preplanned failure of an asset - the slack of which will be taken up by your other assets. Saving for retirement almost becomes a completely foreign idea now.

This article is intended for information purposes only and should not be considered financial advice. You should contact your own personal financial advisor before making any changes.