Your retirement plans may now be a mass of shapeless stone weighing you down. What you need is to take out your modern-day hammers and chisels to mould something precise from that stone. You need to set your sights on a leisurely retirement where the issue of money is as big as deciding to have lemon or cinnamon in your tea. But before you pound the chisel for the first time, (and hack off the femur within the formless block) you may be itching for a little guidance.

To ensure a successful retirement — whether you want to quit the workforce at 35 or 70 — you must:

• think about what kind of lifestyle you want in retirement and how much you're going to need per year to support it;

• figure out how much you'll need on the day of retirement in order to make sure you can draw the amount you need (see the 'multiply by 25' rule below);

• take an educated guess at how long you'll be retired;

• decide where you will live and whether to rent or buy;

• ensure you have adequate health and medical insurance for the family;

• decide how to fill the hours in a day previously devoted to work.

The 'multiply by 25' rule

There's a handy (though not entirely accurate) little formula, developed by mathematicians who are still stuck in a maze somewhere in Palo Alto, to help you figure out how much money you need to set aside now to meet a certain annual expense for a long time — for eternity, in fact.

First you figure out the real rate of return (that is, adjusted for inflation) on your savings. For example, assume your long-term overall annual rate of return on all investments will be eight percent and that at the same time inflation will run at four percent. That gives you a real rate of return of four percent (eight minus four). You divide that four percent into 100, giving you 25. Multiply your annual expense in retirement by that number to arrive at the 'lifetime expense' — that's a very rough estimate of how much you'll need to have on your retirement date to cover those costs in the future.

Another way of expressing it is to say that you need to put aside R25 to fund each R1 of annual spending in your budget. If your total annual spending in retirement will be R50 000, the 'multiply by 25' rule indicates that you need to save R1.25-million before giving up the paycheque. Though not perfect, this equation allows you to consider various scenarios.

Keep in mind that this calculation does not incorporate pension benefits, money you may earn from work after retirement and so on. It assumes no other sources of income than your investments. This will, I hope, not be the case but it's better to err on the conservative side to assume that you’ll have less. Then, if you have more than you planned on, you can live the high life (whatever that is).

How long will you be retired?

This has two parts: When you will retire and how long you will live. You choose when you retire; there is no right answer. Select a date or choose the age at which you want to retire. Whether it's 35, 55 or 69 — it's your choice.

Then, to get a genetically informed guesstimate as to how long you may live, take a look at your parents and grandparents. Who lived the longest among them? Take that age, add 10 years to it (people now are living longer than ever) and use that number.

Subtract from that the age you'll be when you retire and voila! You have a working number for how long you'll be retired.

In order to arrive at a target amount on your date of retirement, you must determine your current financial status. Essentially you need to tally up how much money is coming in right now and also what you have in terms of assets. You're invested in the stock market, right? Since you know the date your retirement is to begin, with the use of a financial calculator you can project how much your portfolio will be worth at that time. You can then compare that with the amount you know you'll need on the Big Day and see whether you need to invest more.

Don’t forget the magic of compound interest (click here to read a recent article explaining why compound interest is, to quote Albert Einstein, 'the most powerful force in the universe). The longer you have for your investments to grow, the larger the growth will be. That's why there's no time like the present to begin!

Adapted from www.motleyfool.com

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