By reverse engineering this question we can give you a good approximation.

Ric Edelman is a co-founder of Edelman Financial Engines. The following is taken from his weekly radio call-in show.

Question: I’m almost 55 years old, and I want to retire in 10 years. How much money will I need to invest now in order to generate a net yearly income of about $60,000 in that much time?

Ric: Congratulations for asking the one question that matters: How much money do you need to have in a piggy bank to retire with the lifestyle you want?

You’ve identified the amount of income you need — $60,000 — and the amount of time you have to achieve that goal — 10 years. That’s exactly the way to approach it.

With that key information, we as financial advisors can use the financial planning process to back you into that number. I need more information than you’ve given me — for example, I need to know how much you’ve already saved — but I’ll tell you basically how it works.

We’d start with how much you’ll get from pensions and Social Security. Let’s assume they total $20,000; now you must come up with another $40,000. How much do you need in savings and investments to produce that? If you’ve saved nothing at all, add a zero to your annual desired income and then double it.

In other words, to produce $40,000, add a zero — that’s $400,000 — and then double that, resulting in $800,000. That is roughly the amount you’d need in total investable assets when you retire. This money can be in a combination of 401(k) accounts, IRAs, brokerage accounts, mutual fund accounts, etc.

How will you generate $800,000? If you’ve saved nothing so far and earn 4% per year, you’d need to save about $5,500 a month. But if you have already saved, say, $150,000, and we can increase your return to 7%, you need to save only $2,900 per month. And if you’re willing to delay retirement by just two years, you’d need to save only $2,000 a month.1

So, we need to talk further about how much you’ve saved, how much more you can put away each month, whether you are willing to alter your goal and where best to invest to help you achieve that goal. And let’s not forget taxes. Most likely you will need more than $800,000 so you can end up with $60,000 net of taxes.

1Assumes a hypothetical 4% and 7% annual return. There is no assurance that such returns will be earned. This is a hypothetical illustration meant to demonstrate the principle of compound interest and is not representative of past or future returns of any specific investment vehicle. AM1101559