Social Security AdministrationOn May 1, the Social Security Administration replaced its physically mailed annual benefits statement with an online system at that provides you with the same information.

The shift to online statements will save the government $70 million a year in printing and mailing costs. But the real value for you is that it puts some key data about your retirement -- and a key tool for planning -- at your fingertips: With the new system, you can get your personal numbers, so you can run very specific "what if" retirement scenarios.

Retirement by the Numbers

First, visit the SSA's website and sign up for a free account. You'll be asked for some basic information like your name, address, Social Security number, and some other questions for security purposes, so it can accurately pull up your numbers.

After you've created an account and are logged into the system, the first numbers you'll see highlighted are your "Estimated Benefit at Full Retirement Age" followed by your "Last Reported Earnings."

Write these numbers down.

Then click on the "Estimated Benefits" tab at the top of the screen. Here, you'll find additional numbers, containing your estimated benefit "At Age 70" and your estimated benefit "At Early Retirement Age."

Write these numbers down as well.

Now, let's get a glimpse of what your retirement will look like.

Simple Math, Stunning Answers

First, take your "Estimated Benefit at Full Retirement Age" and multiply it by 12. That's the estimated amount you'll receive each year from Social Security.

Subtract that number from your "Last Reported Earnings." That's your annual shortfall in retirement -- the amount you'll need to come up with to replace your salary when you retire.

My annual Social Security benefits at full retirement age will be roughly 65% less than the salary I took home last year. I suspect yours will look similar, percentage-wise.

Don't panic just yet.

Making Up the Difference, Part 1

Pull up the number you wrote down earlier for the estimated benefit "At Age 70." Multiply that number by 12. You'll notice that it's significantly higher than your benefit at full retirement age. Mine was 24% higher. That reduces the gap between Social Security and last year's salary.

At age 70, my Social Security benefits amount to just 55% less than the salary I took home. Not great, but more manageable.

So, the first way to start making up the difference in income is to postpone Social Security checks until your 70th birthday.

Now, some folks will have a pension that will completely -- or nearly -- make up the remaining difference. But the rest of us have to take matters into our own hands.

Making Up the Difference, Part 2

Let's assume your annual household income is $50,000 a year -- roughly the national median.

According to your calculations, at age 70, Social Security will provide you with $22,000 a year. So to replace your annual income when you retire, you'll need to come up with $28,000 a year.

One way to achieve this is to pick up a part-time job. Even working just 20 hours a week for slightly more than minimum wage ($10 an hour for example, greeting folks at Walmart or helping do-it-yourselfers at Home Depot) will provide you with $10,400 pre-tax.

Now, your shortfall is at just $17,600.

The rest will need to be replaced by savings.

At age 70, your life expectancy is approximately 17 more years. To fund 17 years' worth of spending $17,600 annually would require almost $300,000 in savings, assuming no growth (hopefully you'll have a portion invested, so this amount will grow). This may seem like a lot, but depending upon your age, it's not all that scary a figure.

Here's a rough outline of how much you should be saving to achieve this, again assuming no growth:

Your Current Age
Number of Years Left to Save before Age 70
Amount You'll Need to Save Each Year

Clearly the sooner you start, the better. And if a portion of this money is invested in a mix of stocks and bonds, it will grow over time -- meaning you'll need to save less on an absolute basis.

Of course, these numbers won't be identical to your own. But with some simple math -- and some personalized digging on the SSA website -- you can find the scenario that will help you determine exactly how much income you'll need to replace when you stop working, and start planning your route to that secure retirement.

For more information on planning a stress-free retirement, I also invite you to check out this this free report I've written about it.

This article was written by Motley Fool analyst Adam J. Wiederman. Click here to read Adam's free report on how to ensure a wealthy retirement. Motley Fool newsletter services have recommended buying shares of Home Depot and creating a diagonal call position on Wal-Mart.

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allen schroeder

Right from the title, the whole article is ridiculous! Unless someone spends their entire existence trying to figure out how to invest and and (probably) cheat, there's no way that goal can ever be attained, except for a very few. Furthermore, retirement SHOULD be a different lifestyle than when you were working, and living on much less income should be an expected part of that.

May 31 2012 at 10:38 AM Report abuse rate up rate down Reply

It takes a real financial genius to advise people to delay Social Security till 70, and then get a part-time job. My suggestion is that giving financil advice be left to somebody who's not a moron.

May 31 2012 at 8:03 AM Report abuse rate up rate down Reply

You omit inflation and the real value of the dollar when you retire. Add the hyper costs of medical care and we will all be in the soup line ......

May 30 2012 at 10:53 PM Report abuse rate up rate down Reply

Not everyone can wait until 70 to retire. Most employers want to get rid of employees over 55 making it hard to stay employed at a real job. And 22 hours as a cart guy at Wal-Mart for minimum wage won't cut it.

May 30 2012 at 9:57 PM Report abuse rate up rate down Reply

You either are proactive with your finances or you give up. I have paid more in child support than 99% of the world makes. I make the average salary and went a year and half without a paycheck on 40 hours. I will retire a multimillionaire. You can make money when the market goes up, but you can make a lot more money when the market goes down. I am not selling anything you just need to use your own brain and figure out how it works. If mitt the mutt can figure out how to bankrupt companies you can figure out how to make money in the market.

May 30 2012 at 7:32 PM Report abuse rate up rate down Reply
1 reply to's comment
cimontesjr're a genius Einstine!

May 31 2012 at 10:07 AM Report abuse rate up rate down Reply

Get real. In order for people to retire with any sizable "nest egg", they first need to be earning enough to save in the first place. For far too many Americans that has been impossible for many years. Ain't gonna happen.

May 30 2012 at 4:39 PM Report abuse +1 rate up rate down Reply
1 reply to jimmyaj451's comment

Yes, I agree. Folks incomes have been stagnant for over 30 yrs, and now no work, loosing pensions and healthcare, with no foreseeable improvement. How can folks save when they don't even have discretionary income? And the average person playing the market? when its down? What do they know about it.

May 31 2012 at 10:11 AM Report abuse rate up rate down Reply