Date: Tue, 10 May 2005 09:56:59 CST
From: "David B. Redmond" 
Newsgroups: misc.invest.financial-plan
Subject: Re: Income needed to retire on??
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On Sun, 8 May 2005 09:41:15 CST, "steve" 
wrote:

>
>All the planning sites/calculators I can find for planning for
>Retirement make some statement like the following:
>"You will need 70% of your preretirement income to retire comfortably"
>
>This seems clearly a ludicrous statement to me.  If someone making
>50000 a year could retire comfortably on 35000, then why would someone
>making 100000 need 70000?  And surely someone making 20000 wouldn't be
>too comfortable living off 14000...
>
>Does anyone have any thoughts on how to come up with a target
>retirement figure that makes a little more sense.  If a figure could be
>arrived at in todays dollars then it could be adjusted forward in time
>as needed to account for inflation.
>
>Any help would be appreciated.
>Steven

My opinion is that this estimate, of all the estimates that goes into
retirement planning, is the one that requires the greatest individual
adjustment.  There are many reasons why one's current salary may not
be a baseline to indicate one's retirement needs.

A much better approach is to look first at one's current and
historical expenses rather than one's income.  These can then be
adjusted for known items that will not apply in the future (kids out
of college, mortgage paid off) and for items that will be added in the
future (health insurance, vacation travel, etc.).  One should probably
also at least attempt a zero based budget exercise of estimating from
scratch what one might want to spend in retirement as a check on the
figures.