Are you looking to save money to leave for your children or a charity, or spend the money you’ve spent your whole life accumulating.

Common wisdom suggests you’ll need 80% of your pre-retirement income once you retire, but this statistic is both confusing and inaccurate for the majority of those that are actually worried about their retirements. Sure, if you’ve got a forced pension you may find your needs (and options) taken care of, but for everyone else we are left with one of the most important decisions of our lives – when to stop working and enjoy the fruits of our labor.

The last years right before you retire are, in most cases, your most profitable ones. Not only is your income likely at it’s highest as your experience and skills have usually paid off in your chosen profession, but your children’s needs are often already taken care of and other expenses (mortgages, cars) are also often paid off by this time.

This leads to an interesting decision point: If you are planning on leaving money to your children, a more aggressive portfolio is recommended because the time horizon is no longer your time horizon, but that of your children, in which case you need to work backwards from the amount of money you’d like to leave them. The alternative is to leave their inheritance up to the vicissitudes of your remaining years – your children simply inheriting the money that is left over after you pass away. Thus, a better way to calculate your retirement would be:

1. Decide how much (if any) you would like to set aside after you pass on for your children, charity, trusts etc.

2. Calculate how much money that leaves you with per year if you retire at 55, 65, etc. Plan for increased health care costs in the future to ensure you have a safety net.

3. Combine this information (the additional years of working with the extra income you’ll have available) to create the perfect scenario for yourself.

Remember, your retirement is your retirement. You should spend it any which way you find suitable. Whether you want to live simply and carefully or finally pursue that long lost hobby of yours it’s your choice, and you should not have to decide 30 years before you retire what you are going to spend your remaining years doing. The only way to avoid this is to calculate your available income under various scenarios – because the costs, after all, are up to you.