There’s a new way to determine when you’ve got enough money in your nest egg to last the rest of your life. It involves flipping the script.

Traditionally, individuals picked the age at which they planned to retire and tried to get as much money in the bank as possible before they hit that age. Typically, people picked somewhere between the age of 65 and 70 as the time they planned to leave their work life behind.

The problem is that thinking was forged during an age when people were holding off until they could qualify for a pension. Today, unless you work in the public sector, pensions are all but extinct — which means the planning process has to change.

Instead of focusing on the age at which you want to retire, it’s time to focus on dollars. The following method takes a little more homework than just saying, “I need to have $1 million by the time I hit 68 to retire,” but it’s proving to be a more preferred method among financial experts to best determine when the time is right to retire.

The new methodology

The number to be focused on now? The dollar amount you need to have saved to support the kind of life you want when you’re retired. It sounds like a subtle shift in thinking, but it’s an important one.

So how do you figure out what that number is?

Fixed expenses/necessities

First, calculate your annual fixed expenses (a.k.a., what you spend on necessities). These include things like housing, utilities, food, transportation (i.e., your car) and living expenses.

If you plan on staying in the same home you’re in now, that can make figuring out what your fixed expenses will look like a little easier. Calculate what you spent last month/last year on necessities, and you’ve got a pretty good starting point for what your fixed expenses will look like in retirement.

One thing to ask yourself: Do you plan on dining out more in retirement than you do now? If the answer is yes, this will increase the amount you’ll need for food.

Another thing to consider: Will your home need modifications to accommodate you or your family in retirement? If so, you may want to knock out those modifications before you retire — while you’re still working and generating income.

Discretionary/optional spending

Second, you’ll want to determine what your annual discretionary (a.k.a. optional) expenses will be. These include things like travel, entertainment and gift-giving expenses.

Coming up with an accurate discretionary figure usually comes down to a question of lifestyle. What kind of life do you want to live in retirement? Do you plan to travel a lot? How badly will you spoil your grandkids over the holidays/on their birthdays?

Be honest with yourself about the kind of life you want to lead and what it may cost. It may be worth it to spend an extra year or two at work if it means you can lead the kind of life in retirement you’ve always dreamed of.

Health care expenses

The third bucket of expenses you’ll want to calculate is also the most difficult to predict: health care expenses. This could be the largest retirement expense you have — and the cost of care is climbing rapidly.

Ask yourself what your insurance will look like in retirement and what expenses it’s likely to cover. Then, ask yourself how you’ll fill those coverage gaps if necessary.

Long-term care insurance may be something you want to start looking into, as well as a membership with Friends Life Care, which can provide you with a Care Coordinator to help you assess your needs and create a truly customized approach to long-term care.

How long will your money last?

The end goal of this exercise to come up with an idea of when your money is likely to run out based on the lifestyle you want to live. If it looks like your money will last you until age 110, it’s safer to retire than if it looks like your money will run out by the time you’re 75. If it looks like your money will run out earlier than you’d hoped, it may pay to stay in the workforce a little longer — assuming you’re not willing to curtail the lifestyle you want to live.

Meeting with a financial adviser to help you iron out the details is also a smart move. Even if you’re comfortable with numbers, it’s a good idea to get second opinion from time to time. A financial adviser can not only help you determine what your expenses will be, but how quickly the money you do have will grow over time once you’ve stopped collecting a paycheck.