How do you estimate how much you need to retire?

Detailed Explanation

Work forward from expenses, not from a headline number. Start with what your life costs now, adjust for what changes in retirement — commuting and mortgage payments may fall, healthcare and travel may rise — then project that forward for inflation over the years until you stop working. That gives an annual figure. Converting it into a target balance depends on how long the money has to last, what other income exists, and what withdrawal rate you are prepared to assume. The estimate will be wrong; its value is that it is explicit enough to revise as circumstances change.