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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

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Retirement income planning

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If in doubt, please send a new question or ask for an update.

Q: I read that I should plan to replace 70% of my current income in retirement. Why is that?

A: The rule of thumb you read has been around for years and unfortunately, has little value in retirement planning today. The assumption was that your income tax would decline and your work-related expenses would decline, so that in retirement you need less income than you need now. Today's active retirees tell an entirely different story. Those who can afford to spend lavishly for travel and those who are engulfed in rewarding hobbies ranging from golf to stick car racing know that it costs much more to be an active retiree than to sit at home. Forget the 70% figure and plan to replace 100% of your pre-retirement income.


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