ARLINGTON, Texas, Feb. 14, 2012 /PRNewswire/ -- How much money do you need to retire? Ten times your income? A million dollars?

The answer depends on who you ask.

A general guideline among financial advisers is to plan on withdrawing four percent of your portfolio each year in retirement. Using this guideline if you want to have an annual income of $40,000 in retirement and plan on living until age 90, you must save $1 million.

Consumers, however, don't agree. According to the Employee Benefit Research Institute's 2011 Retirement Confidence Survey, 31 percent say they can retire comfortably on less than $250,000. Where did $250,000 come from? Forty-two percent of consumers admitted they determined their retirement savings need by guessing.

"Determining the amount of money you need to retire is complex," said Derrick Kinney, a nationally recognized retirement planning specialist and principal of Derrick Kinney & Associates (http://www.derrickkinney.com). "People want the security of a defined number. They want to hear that if they save X amount of dollars, they will have a secure retirement, but there simply isn't a one-size-fits-all answer."

To determine the amount of money you will need in retirement, Kinney recommends starting by defining your idea of a dream retirement early.

"The amount you need to save will vary drastically based on how you envision your ideal retirement," Kinney says. "If your home will be completely paid off or you plan on working part-time, you can probably live on roughly 80 percent of your pre-retirement income. However, if your goal is to live luxuriously in retirement or travel the world without worrying about financial restraints, you may need an annual income greater than your pre-retirement income."

After you figure out what you want to do, estimate how much it will cost. There are numerous online calculators that can provide an estimate of how much you need to save, how much SSI you can expect, etc. Remember to factor in any major goals you want to achieve during retirement. For example, if you want to spend your retirement traveling, you could allocate $15,000 per year to travel.

Next, use these calculators and estimates to make a plan.

"The most common concern I hear as a financial adviser is running out of money during retirement," Kinney says. "To overcome this, I recommend creating a plan and having a back-up plan. I've never heard anyone say they regretted planning too well for retirement."

For example, in your original retirement plan, you could plan on working until age 65, but your back-up plan could include a way to keep your savings on track if you were forced into an early retirement at age 60.

When creating a plan, you must factor in the inflation rate, your expected retirement age, the planned longevity of your retirement and your expected return on investment. Generally, financial advisers use an estimated rate of three to four percent for inflation and four to six percent for return on investments. When in doubt, use conservative estimates.

After following these steps, you should have an estimated, defined and realistic retirement goal. If the number looks astonishingly large and you don't think you could ever save that much, don't panic. Compound interest can make a big impact.

To fully utilize the power of compound interest, Kinney recommends you start saving as soon as possible and make sure to contribute enough to your 401(k) to take advantage of any employer matching benefits.

"What's important is beginning to save early and continuing to save consistently," Kinney says. "You should aim to max out contributions to your 401(k), IRA or both. I usually recommend people who are living comfortably on their current income direct any raises they may receive to their retirement savings."

By determining a retirement savings goal and creating a plan to reach it, you are putting yourself on the path to a more secure and comfortable retirement.

About Derrick Kinney and Derrick Kinney & Associates

Derrick Kinney is a nationally recognized retirement planning specialist that has been interviewed by Bloomberg TV, CNBC, CNN Radio, CBS Marketwatch, Money Magazine, The Wall Street Journal and many more. He is the principal of Derrick Kinney & Associates, a financial planning practice located in the Dallas/Fort Worth metroplex and holds ChFC, CASL, and CLTC designations. For more information on Kinney, visit http://www.derrickkinney.com.

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Dallas Retirement Planning Specialist Derrick Kinney Provides Tips on How to Create a Realistic Retirement Savings Goal