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posted: 11/22/2006 reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date.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.
Summary
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