[catdaddy]

When I was planning for my post-retirement finances I realized that I would need need a certain amount of "saved" money to meet my expected expenses. To determine how much that would be I subscribed to the 4% Rule which roughly suggests that if a person taps into their retirement savings by withdrawing 4% of their savings annually to meet expenses that this should be sustainable for the life of the person.

After calculating my expected expenses, I then had a target dollar figure for savings that would be needed. The problem with that was that the dollar figure didn't include my Social Security or small pension income that I would have. So how do you convert those types of income streams into lump-sum saving figures?

One of the easiest ways to estimate the lump-sum value of your Social Security check is to use that previously mentioned 4% rule. Using the 4% rule you can:
• Take 4% of the value of a well-diversified portfolio during your first year of retirement.
• Increase that take by the rate of inflation every year (which is built into Social Security).
• Have a very good chance of seeing your money last as long as you do.
So, for example, if you're expecting $1,000 a month from Social Security, that would work out to $12,000 a year. Dividing that $12,000 by 4% gives you a lump-sum value of $300,000.

If you anticipate needing $50,000 worth of annual income during retirement, that same 4% rule works out to a lump sum of $1,250,000. Subtract out the $300,000 estimated value of that Social Security benefit, and it means you'd need to save an additional $950,000 on your own to cover your retirement lifestyle.

So all you need to do is make sure you've got $950,000 on hand by the time you're Social Security eligible, and then call it a career.