Using Online Retirement Calculators

You may be chagrined to find that even $1 million isn't enough.

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I could have taken a vacation to Greece with the money I've lost in my retirement account this year. When I told my husband that my 401(k) balance had plunged 17 percent since January, he said the solution was to stop looking at it.

He has a point, but there's something to be said for embracing the shock of just how paltry many of our nest eggs have become. According to a recent report by the Transamerica Center for Retirement Studies, most of us guess how much money we'll need once we stop working. Only 1 in 10 people does any sort of calculation at all. That might help explain why, on average, Americans are on track to replace less than 60 percent of their income during retirement. Financial experts generally recommend that retirees replace at least 80 percent, given the rising costs of healthcare.

The recent turmoil in the financial markets inspired me to crunch some numbers through several free, online calculators. I'd long assumed that I was saving plenty (around 10 percent of my annual income since I started working in my early 20s, about six years ago) to fund a comfortable retirement in the tropical locale of my choosing. I was wrong, which underscores just how much money today's workers—most of whom, like me, lack pensions—need to set aside.

TD Ameritrade's WealthRuler, which incorporates future inflation into its calculations, warned me that in the case of a poor market, I will end up running out of money at age 80. Bankrate.com's retirement calculator told me that I'll be able to support myself for only 11 years of retirement based on my current savings rate. Similarly, Transamerica calculated that with strong market returns, I could manage to save over $1 million—but that could still leave me short on cash.

Catherine Collinson, president of the Transamerica Center, hopes seeing numbers like these will encourage action. "For people who get a head start, it's astonishing to see how much one can save. It's not impossible."

For those alarmed by recent declines in their retirement accounts, here are some additional suggestions:

Save more, not less. Most financial advisers say taking money out of the market now is the wrong move, because you risk missing out on likely future gains. And the upside of a weak stock market is your retirement account contributions are buying shares more cheaply.

Change your budget. Diane Young of TD Ameritrade says the biggest mistake people make is underestimating how much they can put away for later. "They're thinking they can't save more than they're already saving. But you can. You don't have to go out to dinner four times a week or spend $5 on coffee," she says.

Follow tried-and-true strategies. Diversify your investments through index or mutual funds, and decrease your exposure to stocks by shifting into safer vehicles such as bonds and cash as you approach retirement.

Then forget about it. After sufficiently scaring myself into saving as much money as I can, I've taken my husband's advice to ignore the ups and downs of my account. And I also try not to think too hard about all the things I could have done with the money that has since evaporated.