Comments on: Do You Need 80% of Your Current Income in Retirement?

By: Jessica

Jessica — Mon, 20 Aug 2007 15:16:13 +0000

Personally, I’m aiming for 100% at this point being 40 some years away from retirement (if I actually retire and do it at 65-ish), and I don’t include SS in my plans. I have plenty of life changes ahead at this point that may change things, but I figure better to aim high than low.

By: Dave

Dave — Sat, 12 May 2007 21:37:08 +0000

What do you find shocking, fin_indie? That it is so high or that it is so low?

According to personal finance writer Scott Burns, even the wealthy need Social Security. You can read his article on this topic at assetbuilder.com/?p=86

By: fin_indie

fin_indie — Sat, 12 May 2007 16:05:24 +0000

Interesting comments by Dave and Jimmy.

One thing I’m not understanding in the Aon study is: are people that were making $90k pre-retirement really getting 33% of their post-retirement income from social security? is that right?! Shocking.

By: JimmyInGreatLakes

JimmyInGreatLakes — Thu, 10 May 2007 13:26:52 +0000

As Dave mentioned, right off the top you will not have to pay 7% towards SS anymore so, assuming the same lifestyle, 93% can be your baseline when figuring out what you can live on.

By: Dave

Dave — Wed, 09 May 2007 23:37:39 +0000

Here’s how it has worked out for us. When I was working, my disposable income was about 45% of my taxable income:

10% was going into my 401(k)
10% was going into non-qualified investments
7% was going into Social Security
12% was going into my mortgage
16% was going into income taxes.

When I retired, I stopped paying into the 401(k), investments, SS, and mortgage (I paid it off). Reducing my income to keep my standard of living approximately constant cut my income tax by another 10%. So my taxable income early in retirement is about 55% of my pre-retirement income. We still have nice vacations, spoil our grandchildren, and enjoy life, and since we followed the 80% rule, we have more than we need, which has allowed us to support a few charitable causes we like. Social Security supplies about 1/3 of our income needs, and distributions from our IRAs easily provide the other 2/3 using the 4% distribution rule.

By: dimes

dimes — Tue, 08 May 2007 21:10:50 +0000

I think you should count on needing 100% of your pre-retirement income. 80% is too rosy of an estimate. Yu’ll need it for things like traveling and spoiling grandchildren when you’re younger, then exorbitant health costs when you get older.

By: Dus10

Dus10 — Mon, 07 May 2007 15:39:27 +0000

I have no idea how much I am going to need in retirement. If I am healthy, I surely don’t want to be sitting around my house watching TV all day long; I will want to be traveling. I would imagine taking a few nice international trips each year would be expensive (just a wild guess)… so I don’t think I would want less money, but more money.

If I am not healthy, then I will likely have more expenses.

Either way, it looks like more money is necessary unless you want to veg out in front of the stupid box.