Retirement is the point where we finally settle down and enjoy all we’ve worked for. The problem is that it can take years to save enough money. Smart planning is often not enough when markets go in the wrong direction, according to retirement experts like Robert Nico Martinelli and others.

How much money do you need?

The first step is knowing how much you will need to retire at your desired lifestyle level. While that may seem obvious, many people overlook this step.

What is your retirement lifestyle?

This is an important question because it helps determine how much money you will need to save each month or year. If you have a fairly modest income now but dream of cruising the Mediterranean every winter with your spouse for six months out of the year, don’t be surprised if it takes more than 30 years to achieve this goal.

How long do you expect to live in retirement?

While no one can predict longevity, most planners use 75 as the average life expectancy at age 65 for both males and females. Women are slightly longer lived on average than men are. This means that women should plan for about three years less than men who retire at 65.

How much will you withdraw annually from your savings?

Once you know how much money you need to retire, the next step is determining how much of that income can be safely withdrawn each year. The general rule-of-thumb is four percent, though this percentage was worked out many years ago when interest rates were higher. Today it may not be safe for retirees to withdraw more than three percent of their total investment portfolio per year, even if they are willing to reduce spending later in life or take a lump sum distribution all at once.

What rate of return do you expect on your retirement investments?

The average annualized return for stocks since 1926 has been about nine percent, according to Ibbotson Associates’ Stocks, Bonds, Bills, and Inflation Yearbook.

If you are planning on retiring in 10 or more years, you have a decent chance of seeing six percent returns at least once during your investment lifetime. If you plan to retire in less than five years, however, it is highly unlikely that you will earn the kind of return needed for successful retirement planning.

What risks do you accept?

Last but not least, figure out what risks will affect your portfolio and make sure they won’t hurt too much. Few people like risk – even if it can be managed – but we all need some level to stay satisfied—or even aggressive—with our investments over time.

The more risk averse you are, the more time you will need for your investments to grow, or the less aggressive you will be able to be. And this could hurt your returns significantly in many cases.

For example, if you want a portfolio that can see eight percent annualized returns and figure an investment lifetime of 25 years before retirement, it would take a very conservative approach to get there. You might end up with only six-percent annualized returns during the majority of that time because of payouts and market volatility throughout your journey.