This post is sponsored by PSECU, a Pennsylvania-based credit union.

Just this morning, my co-worker and I were talking about the amount of money we need to retire. Where we work, finances aren't really talked about.

It's either because people don't like to talk about it, have other plans than saving money, or are burdened with so much debt that they don't know where to start.

While we were talking, I wondered silently how much do or my wife and I really need to retire.

I figured, just by mental calculation, that we would need around $3 million in today's dollars to retire now. That's a lot because when we retire, we are absolutely retiring and not working anymore.

Of course, that's just mental calculation, and there are a lot of things to consider or factor in.

How Much Do I Need to Retire?

When did you start thinking about retirement?

For most people, they don't start thinking about it until they're in their 30s or 40s, but you should really start thinking about it as early as possible. Let's take a closer look at the average savings that you should have by the time you retire.

Factors That Influence How Much You Need to Retire

The amount of money that you need to retire on will depend on a lot of things, including:

• Your Lifestyle – How do you want to spend your retirement? Do you want to travel, or spend your golden years closer to home? Do you want to live comfortably, or are you planning on relying on your Social Security? Think about the lifestyle that you want to live once you're done working.
• Retirement Age – Currently, the social security retirement age is 65 but it will be climbing to 67 for individuals born after 1960. Do you want to wait until you're 67 to retire, or do you want to retire earlier?
• The Economy – What is the economy projected to look like by the time you retire. What about inflation?
• Debts – Do you plan to pay off all your debts before you retire or will you continue to pay down your debts after you retire.
• Life Expectancy – The average life expectancy in developed countries is 76 for men and 82 for women. If you're healthy at retirement, you can expect to live at least 10 years, perhaps more – keep that in mind when you plan your retirement fund.
• Pensions or Other Passive Income – Will you have any income coming in, from pensions or other sources, after your retirement? These will need to be factored into your calculations as well.

Retire With $1 Million

A good rule of thumb is that you will need an at least 70 to 85 percent of your pre-retirement income annually in order to live comfortably after you retire.

Most financial advisors recommend having at least a million dollars in a retirement fund before you pick up your last paycheck.

This can usually be achieved in 30-35 years by putting away 20 percent of your salary in a retirement or investment account that makes back at least 6.5 percent in interest every year.

If you start at age 30, with your deposits and compound interest, you can save nearly a million by the time you turn 60 on an average salary.

With $1 million in the bank, you can live on four percent of that – or $40,000 a year – for quite a long time while still having enough money left over to cover things like medical bills or other unexpected expenses.

Even after taking out your four percent a year, the money that is left in the retirement account will still continue to accrue interest.

PSECU created the thorough chart below that shows this concept in visual form. Find more info about the average retirement savings by age here.

When done correctly, living off of four percent of $1 million could last you for several decades, which means you could retire early as long as you can access those funds.

Many retirement accounts don’t allow you to access your money until a certain age.

You may want to have some form of passive income after your retirement, unless you have a pension.  It can be as simple as starting a blog and cashing in on the ad revenue but in the event of something like a stock market crash that costs you the majority of your retirement fund, that passive income could save you from going into debt.

You can live on less than $1 million in your retirement account, but that number gives you more than a little bit of wiggle room if something comes up after you finally leave work for the last time.

How much you put in your retirement account is up to you and how you want to live during your retirement.