The 2008-2009 financial crisis and the impact on values of real estate and securities portfolios has caused huge ripple effects in the world of retirement planning, both from the standpoint of those who own the plan and those giving advice.

The largest impact is generally on those recently retired from their careers and those who were approaching their anticipated retirement date. These groups might have had a somewhat more aggressive investment posture going into the decline, and suffered more damage to overall portfolio values.

Those who have been in retirement for quite a while may have been sheltered somewhat by a more conservative allocation. Those who have several years or more to continue in their careers have the ability to accumulate future savings while waiting for asset values to recover, even if it means postponing their official termination of employment date.

I thought it might be a great time to review the concept of how much is enough when it comes to determining your ability to retire, and support yourself for the remainder of your days without running out of money.

Obviously, there are many variables involved in this calculation. Standard of living, tax bracket, rate of return on invested capital, residence paid off or with mortgage, etc. Simplifying the process for an initial assessment, we have found two credible ways to determine how much is needed in an investment portfolio producing income and growth to support a household through a typical retirement of 15 to 30 years.

Safe withdrawal rate method: Studies over the years have generally concluded that the safe withdrawal rate from a conservatively allocated investment portfolio is somewhere between 4 and 6 percent. Taking the average, we come up with what we call the 5 Percent Rule, meaning that if you spend about 5 percent of your investment portfolio’s principal value each year and the portfolio is allocated to generate a return of 5 percent or more, you should never run out of money during your lifetime.

We can now back into the total portfolio value which is needed to support a lifestyle. For example if a retired couple needs $50,000 to support their household for one year, and they receive $20,000 in Social Security Benefits, they need to produce $30,000 from the investment portfolio. Based on the 5 Percent Rule, this couple would need $600,000 in investments to produce the $30,000 of income desired. ($30,000 divided by .05 = $600,000).

Ten times last full year salary: A financial planner friend of mine in Minneapolis taught me another way to look at this issue. He likes to use an estimate of the size of the investment portfolio needed to produce income and support a retired persons lifestyle as 10 times the last year of full salary he/she was accustomed to prior to retirement.

If the same couple from the first example was accustomed to a $70,000 annual income in the last year before retirement, then $700,000 would be a good goal for the size of the investment portfolio needed to produce enough income to maintain their lifestyle through retirement.

I think using both of these methods to ballpark your personal goal for retirement assets or to assess what a reasonable level of spending is from the position you find yourself in today will be helpful.

When considering these amounts, it is helpful to consider that in retirement (for most folks), expenses decline compared to the years leading up to retirement. For example, the mortgage is likely paid off and you will no longer be saving for retirement (savings is an expense to the household during the accumulation years). These are two major expenses that could easily consume 20 to 40 percent of a household budget in the years leading up to termination of the working years.

Of course, the level of expenditures to which you are accustomed is a major factor. If your goal is to travel abroad every year from your retirement date to the pearly gates, then an adjustment for that additional expense should be factored in.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing.