Message Font: Serif | Sans-Serif
No. of Recommendations: 0
The really silly thing in most retirement planning articles is talking about the percentage of your income you are saving or the percentage of your current salary you will "need" to live on. What does a percentage of your gross income have to do with anything?

I think the income needed in retirement is *related* to one's earned income while working. It can be pretty hard to add up every expense, so I estimate my retirement income needs based off my current income minus what I know I *won't* need when not working.

What I won't need in retirement:
-7.65% FICA tax
-10% contribution to 401k
-More than a few years worth of expenses for children*
-More than a couple more years of house payments
The second two items are still expenses, but aren't part of the income needed indefinately. The mortgage I can pay off, and the child expenses can be covered with an account that I know only needs to last until the last one is out of college.

Based on activities I do, my transportation costs won't really be less after I'm done working for money. Also, my clothing expense probably won't change. I know that my income taxes should be lower (since my income needs will be lower), but health care expense will be going up.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.