Madonna was the first to hit upon it, the peerless sage that she is. We live in a material world and our lives are consumed by material things. There are so many things beckoning for our attention today, like that jazzy new cell phone, a must-have car or those Oreo-slathered Pizzas that everyone loves for some obscure reason. But let’s face it; your worth isn’t what it used to be. Your stocks have taken a beating, your house’s value has eroded and that salary raise you were looking for might not be forthcoming. It’s time to tie in your purchases with your financial goals now.

Crunch those retirement numbers pronto, for how else will you know that you’ve saved enough or are on the right track? There are several tools, some offline and some online, that will help you in this aim should you be so inclined. No matter whether you’re using a calculator or a simple spreadsheet, here’s how you go about doing things. Pull up a statement from that retirement account (you do have one, right?), pull up a chair and let’s get started.

Potential benefits

If you plan to retire at the age of 55 or beyond, it’s quite likely you will receive some benefit of some sort, such as social security cover if you’re in the US of A. If you’re younger than that, play it safer by assuming you’ll get something like 50% of any projected benefits (we did say play it safe) and enter this age and figure into online calculators available freely in Google when you type in ‘retirement calculator’ to add to your knowledge and reference. Also factor in any potential increase in these benefits due to inflation, or income from trusts and reverse mortgages.

Your own predictions

Inflation can be pegged at 3-4% because who knows if it’ll be nutty a few years down the line? What’s far likelier is a rise a the rate of taxation as those awaiting the retirement home shortly can expect tax rates to head southwards once they do retire. Similarly, assume your income will rise proportionately with taxes and then figure out your expenses needed and possible windfalls of money, such as money earned from selling a business but always keep an eye on the big one; will your mortgage be paid off by the time you retire?

And remember, any analysis is only as good as the revisions it constantly receives. As your income and expenses (both future and present) vary, so too will your retirement requirements. Always run checks to see if you are on track and use a variety of tracking tools to stay up to pace. You don’t want to risk your retirement on a risky piece of math that is unverified.