At some point, this question comes to everyone's mind. Many nearing retirement never really thought about it. Like most, they just got busy with life until one day they described the number of cheques they were due in months rather than years.
If you are already retired with no prospect of gaining additional income you have what you have and it is either enough or it isn't. If it's early on, you really should make plans to find out where you are at as knowing is better than not knowing.
If you are very near (but not in) retirement you might use simple math. As an example if you plan to retire at 65 and wish for $40,000 per year for 20 years you need $800,000! Of course, you can deduct known sources such as CPP and OAS, private pension plans, life insurance annuities, inheritances etc. to come up with a more accurate number. The rest, must come from your equity (savings, investments and real estate).
For the rest of us the math is not so simple. Some might turn to the internet to find something free. You'll get a number and probably what you paid for. Like most in our business we pay substantial fees to lease programs that calculate numbers and generate detailed reports taking into account the changing impact of income, retirement spending scenarios, investment returns, other sources of money, mortality tables and our ever complicated tax code.
Fact is even if you generate a relatively accurate NUMBER it's not that important. It's just a number based upon lots of variables. The key? The discussion of the variables.
There are lots but 4 that you have some level of control over. They are; 1) when you decide to retire, 2) how much money you will save annually from now until that date, 3) how you will allocate your investment funds now and if the future and finally, 4) how much you will spend annually in retirement.
The things you can control are what makes it difficult to determine if, should, how or when you can retire.
A retirement analysis should give you an idea of how much you could spend in retirement and in conjunction with the completion of a household budget will tell you whether it is enough.
Best to find out well in advance.