What do you REALLY need to live on in retirement?

Fidelity Investments has estimated total savings at various ages that provide adequate retirement income. For example, at age 67 they say you need ten times your preretirement income. So, if you earned $100,000 just before retirement, you need a $1,000,000 nest egg. (the younger you retire, the larger multiple of earnings you need) That would provide an income for life starting at about $40,000 per year.

At age 67 and earning $100,000 Social Security estimates your annual benefit at $28,716.

That provides a total gross income of $68,716 in retirement.

Saving something for an emergency or contingency fund is still necessary after retirement so I’ll reduce retirement gross pretax income by 5% to $65,280.

Let’s say while working you saved 15% of income and paid 7.65% in FICA payroll taxes. That means before income taxes your gross take home pay was $77,350. In retirement it will be $12,070 less.

Will you actually spend that much less? Will you spend more?

Here are some variables I can think of:

  • Where you live
  • Do you plan to relocate and/or downsize to lower spending?
  • Will you spend more on health insurance?
  • Do you have savings/investments in addition to retirement accounts?
  • Do you have a spouse entitled to Social Security?
  • Will your spending in retirement include new things like travel, hobbies, etc.

NOTE: Fidelity has developed a series of salary multipliers in order to provide participants with one measure of how their current retirement savings might be compared to potential income needs in retirement. The salary multiplier suggested is based solely on your current age. In developing the series of salary multipliers corresponding to age, Fidelity assumed age-based asset allocations consistent with the equity glide path of a typical target date retirement fund, a 15% savings rate, a 1.5% constant real wage growth, a retirement age of 67 and a planning age through 93. The replacement annual income target is defined as 45% of pre-retirement annual income and assumes no pension income. This target is based on Consumer Expenditure Survey (BLS), Statistics of Income Tax Stat, IRS tax brackets and Social Security Benefit Calculators. Fidelity developed the salary multipliers through multiple market simulations based on historical market data, assuming poor market conditions to support a 90% confidence level of success.



  1. “Here are some variables I can think of:

    Do you have a spouse entitled to Social Security?”

    Can you still afford to live if either spouse dies?

    “When both spouses are collecting Social Security and one passes, the surviving spouse generally receives whichever is greater: their own benefit, or their deceased spouse’s benefit.”

    “For a couple that is married filing jointly, the top of the 12% bracket in 2020 is $80,250. For a single person, the top of the 12% tax bracket in 2021 is $40,525. Therefore, as a single taxpayer, Janet will be subject to a higher tax bracket of 22%.”


  2. From personal experience, those are huge questions that you have to ask yourself, especially if you are relocating when you retire, so Mr. Quinn is providing some very valuable info here. I was lucky to have access to a certified financial planner through my 401k account manager and had a plan made a few years before I retired.. It was free because it was part of my employer’s contract with the manager. I was surprised at how many of my co-workers who were nearing retirement were not aware of this service or that is was continuously available to them after retirement . Even though I take pride in selecting my funds, etc. and thought I knew a something about investments, what my cash flow was going to be in retirement, and had an idea about what the sequence of asset withdrawals should be, I had a lot to learn and it opened my eyes about a few things to keep on the lookout for. I then had it done again a year into retirement. It was a lot of work to assemble everything they needed to complete the process, but it gave me a much more insight to my financial future. They will cover what you want them to and even more things you may not have thought of. You have to realize, especially if you are going to have only Social Security and your savings in retirement, you are now a pension manager, and even professional pension managers utilize advisors. I am not one who is willing to pay 1% of my assets annually to a full-service manager, so this worked out well for me. I recommend that even if you have to pay something (maybe $800-2,000, as I was told it would cost), it is certainly cheaper than $10,000/year for every $1M you have saved plus the underlying fund management fees of your individual investments.


    1. One word of warning. My company had a referral service for certified financial planners too. I went to one on the list back in the mid-2000s She had no ideal how a Roth IRA work and how my 401K worked. She just wanted to sell me muni bonds. It didn’t sound right or feel right, so I walked away. Did some research and found out that they pay some money and take a test. Basically anybody can take the test and become a CFP.

      Just research the background of your CFP to be safe. There are a lot of people who are willing to scam you. If I am not a millionaire, why does this person think that I can make them money? Have them answer that question. If they tell you that they are going to charge a high fee, you might want to used them because at least they are honest. The higher fee might earn you more money or prevent you from losing more money and be totally worth it. But if it sounds too good to true, it is. I thought I was ok become the name was provided to me from a list that my company’s program had gotten. Trust but verify.

      But don’t go it a lone. Get help, from financial experts. Talk to your co-workers too. Everybody’s situation is different, but if they are being told something different than you need to ask your CFP why its not right for you or it might being a warning that something might be wrong and to keep an eye on what’s going on.


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