How Much Income Do I Need in Retirement?

How Much Income Do I Need in Retirement?
Most people are focused on saving for retirement so they’ll have the money they need. However, ask most people how much they’re going to spend in retirement and they have no idea. To plan for retirement effectively, you need to have some sense of what your spending needs are actually going to be. Knowing what you’ll spend helps you know how much you need to save. Just like everything else in finance, figuring out how much you will spend in retirement is a big “it depends.” Most folks want to carry the same standard of living into retirement they had while working. Same standard of living, same cost of living, right? It’s not quite that simple. Retirement changes everything, including how you determine your budget. One common approach is to find your “replacement ratio.” This is found by taking the income you made immediately prior to retirement and figuring out what percent of that income you think you’ll spend every year. The amount you’ll spend is the amount you’ll need to replace every year in one way or another. Most people end up needing less income in retirement than they did while working, because, among other smaller reasons: You don’t […]

Source: Retirement Researcher

How Much Income Do I Need in Retirement?

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