Who knows? Only you can prevent forest fi … oh, that’s not it. Only you know what lifestyle you want to live in retirement and for how long, at least based on your current health and at what age you plan to retire.
Making the calculation can be a complex exercise which you will probably avoid or it can be a simple back of the envelop quick estimate.
For example, let’s say your current income is $65,000 a year. Using the Social Security quick calculator you get this:
Your estimated monthly benefit amount, beginning at age 67 in 2015, is $1,765.00. For your estimate, we assumed no future increases in prices or earnings.
That’s $21,180 a year. I am a great believer that you need to retire with 100% income replacement (to help cope with inflation and unplanned expenses so as not to draw from your retirement funds for those expenses). That means you need to replace $43,850 from other sources.
You could buy a life annuity today (age 67) for about $650,000 that would give you that amount for your lifetime. Or, you could use the 4% rule if you accumulated $1,096,250 or $1,461,666 if you withdrew 3% a year.
You may also consider a combination of a smaller annuity and keeping a chunk of your savings giving you more flexibility and the possibility of leaving cash for a survivor. And don’t forget the option of using life insurance to protect your survivor, whole life that is, so it will always be there.
There you go, you now know exactly what you have to do to be secure in retirement … give up your morning latte, your gym membership, tattoos, cruising and maybe a few other necessities. Have at it‼️
QUINNSCOMMENTARY 
Whoops, one more thing: If the retiree has any room left, tattoo parlors often provide a senor discount, the sag bargain.
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I know you have thought of these things, but did not include them, maybe for simplicity’s sake. Here are a few things that make a more realistic set of calculations a little less foreboding.
A. The $65,000 a year the person makes in salary is subject to SS tax.
B. The $65,000 a year probably had some portion taken out for savings in the form of a 401K, etc.
C. Daily commuting costs are usually not a factor in retirement.
D. For many, the mortgage has been paid off by the time of retirement.
E. Many government entities give seniors a break on school and/or property taxes.
F. Many transportation districts give large senior discounts for bus, subway, train, ferry, etc.
G. Total health care cost to the individual, at least for the first 5 or 10 years after retirement, often go down – not up because of Medicare.
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All true, but I still feel 100% replacement should be the goal as should some excess to “save” even if only to replace what may be lost to an emergency expense. In addition, other more pleasurable spending usually occurs or we would like it to occur. On top of that more and more people retiring today do not have their mortgage paid. I didn’t because I used equity for kids college. But hey, I’m fiscally conservative and like to all the bases covered. Four years after I retired I was notified my pension was calculated incorrectly and I lost 10% of my income and then another 10% to pay back the claimed overpayment. I was able to adjust only because of my being so frugal to begin with.
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Another point, when I went on Medicare, the combined premium for my wife and I including the supplemental coverage was three times what I paid as an employee.
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