Whether you choose to travel or pursue hobbies at home, you could spend 20 years or more in retirement. You'll need to plan carefully so that you don't outlive your nest egg. A good place to start is to calculate how much retirement income you'll need, and take an inventory of your sources of retirement income.

Calculate How Much You Need
Few workers have taken the step to find out how much money they need in retirement. If you haven't determined how much you have and how long it will last in retirement, start by projecting the value of your retirement investments. Then estimate how much retirement income you'll need from those savings so you'll know if you have enough for your expected years in retirement.

The Stowers Financial Analysis can help you determine if there's a gap between what you have and what you need for retirement. It considers key factors, such as when you expect to retire, the current value of your investments, expected annual pre-retirement return on investment and how long you think you will live. Without calculating your retirement income need versus actual savings, you won't know whether your nest egg will last.

Decide How Much to Budget
To determine how much you'll need, apply the general guideline that you will need 70% to 80% of your annual pre-retirement income to live on in retirement. If your current annual income is $40,000, for example, you'll probably need $28,000 to $32,000 annually to maintain your current lifestyle in retirement.

You may want more income in the early years for travel, or you may depend heavily on your retirement income in later years to pay for healthcare or nursing home costs. There's no way to predict the future, so it's important to budget for potential lifestyle and healthcare needs.

You also should inventory your sources of retirement income, which might include employer-sponsored retirement plans, Social Security and personal accounts such as IRAs. Based on your expected income and expenses, you can develop a monthly retirement budget.