Simple retirement income goals – that require determination and working life planning.

Forget detailed budgets, finite calculation.

Let’s make this simple and see what happens.You are age 65 and want to retire January 1, 2022, You earn $60,000 before taxes, which, using the Social Security Quick Calculator, provides an annual benefit of $17,148.

That means (according to my strategy) that you need to generate additional gross income of $42,852 to start retirement replacing 100% of your gross pre-retirement income. I use gross income to keep it simple. There are, of course, taxes before and after retirement.

Assuming not 4% annual withdrawals, but 3.5% to reflect concerns over low bond interest rates, you need invested assets of $1,224,342 dedicated for retirement.

I say your planning is that simple and the best place to start. I maintain that SPENDING will not, over a period of retirement, be less than during pre-retirement. Different, but not less and by spending I don’t mean just getting by covering living expenses, I’m talking about enjoying retirement and spending accordingly no matter how long retirement lasts. And, I’m talking about the ability to deal with significant unplanned spending – high dental costs, major home repairs, car repairs, prescription costs, etc. And then there is inflation. Since I retired my spending power has dropped by 23%.

Two points of rebuttal are mentioned when I explain my position. Because a mortgage will be paid off, expenses are lower. That saving from no mortgage may be valid in terms of more disposable income if the mortgage is paid shortly before retirement, but if it was years before, spending habits have likely already adjusted accordingly.

Point two, saving stops when you retire. I say not true. There may be a decline in the amount being saved, but some ongoing saving is highly desirable.

What do you say?

If you want to know how much you need to save to generate your retirement income goal, use a future value calculator and use your own annual return assumption. Of course if you are many years from retirement, annual adjustments for inflation are necessary.


  1. I never made more than $35K during my 27 years of employment 1971 thru 2006, I had 7 years that I was not employed, and my only income was a small military pension. My total income in 27 years of work was $310,000 I retired at age 50 in 2006 and in 2018 at age 62, I started SS retirement benefits. My wife and I are living on 70% of our monthly income. That includes taxes, utilities, insurance, food / household items, cell phone, streaming services, car payment, gas and car maintenance. Our emergency fund is over $10,000 now, a first in 43 years of marriage. I never have understood all the so called experts that say you need hundreds of thousands of dollars to raise a child from birth to 18 years. Or, you better have 2 million in retirement savings or you will be screwed. Millions of families and retiree’s prove the experts wrong every day. The biggest improvement in cash flow for me, is no house payment, and no credit card debt. Living in a state with cheaper hydroelectric power and no sales tax sure help.


    1. Every time i read one of your comments i am amazed. I wish i knew how you did it beyond living in a low cost area i think you said Montana?


      1. I have lived in Montana since 1995. But, I have lived in CA, VA and Japan. My wife and I raised 4 children from 1978 to 2009. How did we do it, we said NO to our children plenty of times. None of my children learned to drive while living at home, as we only had one car and there was no way I could pay teenage car insurance rates. I did not have internet service at home until 2006. We did have cable or sat TV, always the basic package. No Video games, what at $50 per game are you crazy is what I told my 13 year old son in 1991. I purchased used cars from 1986 to 2020 paying cash. I was taught well by my auto mechanic father and have always done all my car repairs, saving me thousands of dollars. I just did an oil and filter change on my 2020 Ford Edge, cost $30. It took me 30 minutes and saved me $15 and I know the job was done right. I buy used products all the time, used push mower $35 at pawn shop, been using it since 2010. Used snow blower $80, not even had enough snow to use it yet. My children age 31, 35, 41 and 43 have zero credit card debt, zero student loans, only house and car payments. Two of them were smart enough to get the military to pay for their education. Money is a tool to help you get through this life, it is not to be wasted on $1,000 cell phones or anything else that you do not really need. I am on a 10 year plan to have $100,000 invested. If nothing major happens I will have $26K invested by Dec 2023.


      2. You can use any of my posts in your story. Do you have access to our email addresses when we post? If you have any additional questions, feel free to email me.


  2. I never agreed with the retirement goal of replacing 100% of your work income. The amount you were saving doesn’t need to be replaced. If you save $9000 of that 60K salary, then you met your lifestyle spending goals with the $51k left, No longer saving, the retiree can live the same life by replacing $51k.
    More often, salary will be much higher in the later years of one’s career. Combined with being mortgage-free, the amount saved in the last years can be pretty high, Again, most of us will not be making retirement contributions when we are in fact retired. So, we don’t need to replace that portion of our income.


  3. One other thing to consider, most will feel that once the mortgage is paid off, they will be on easy street. We were able to pay our home off early, but now our property tax has risen over the years that now it is as much as our mortgage payment was! Of course taxes don’t decrease, conversely, pensions don’t increase!
    Good article btw.
    Taxes were $2,600.00 per year, mortgage was $14,000.00
    Now our tax bill is $14,300.00! All in a 24yr period. We were fortunate enough to have a 15yr mortgage term.

    Sent from Outlook



  4. I just like to point out that many people have unplanned expenses when it come to their vehicles and house even before retirement. These all should be planned expenses. If you plan to live or have a family history of living 10, 20, or 30 years after retirement then you should expect these expenses. They do go away either at retirement. Hot water heaters last about 10 years, cars 10-15 years, roofs 20-30 years, other major appliances and furniture depends on usage. While I was working, I got CDs for all my various insurance deductibles and they are just sitting there in case a tree fall on my house or car.
    This year due to knee surgery I thought I was going to have to pay for lawn care. I had to put off minor household maintenance projects for 3 months. In future I might have to pay people to do what I was easily once able to do as a point of how your expenses might change.
    If it wasn’t for Covid-19 we would be traveling a lot more too.

    Now that inflation hit 6.8% (figure was released yesterday) more of my spending will be going to essentials things.


    1. How do you plan for healthcare and long term care? A human has a much greater volatility in life duration than a water heater life span.


      1. I ask a financial guy once while Obamacare was being pushed through Congress. His answer was “Nobody has a clue what is going to happen with healthcare, we can only give you the historical perspective.”

        I also wonder why nobody is promising free LTC to buy votes?

        Medical is not a percentage of your income. You can buy different levels of coverage, but the coverage costs doesn’t care what your income is for the most part. What tier of coverage that you can afford is a differently story. Everybody’s case is different due to their health condition. But I am prepared to spend $15K per year. This seem like the worse case with insurance if you manage to stay in network and all their other rules. This is my worse year ever and I have only paid out of pocket $5,800 including insurance premiums. This is easily offset by my lack of travel due to my knee surgery. What did I do with the other $9,200? Saved it, I won’t be healthy forever. In other words I have $15k in savings and or non-essential spending that I can immediately cut back on and not risk losing the house or go hungry. If you retire with debt, mortgages, and a car loan, you might not have that flexibility of shifting some of your discretionary spending to medical.

        My point in my post was if your roof is 25 years old when you retired at age 65, you’ll probably have to replace it before you turn 75. Are you going to pay cash from your savings? 401K plan? Get a home equity loan? My plan was to replace my roof at age 60 and hoped that it would last 30 years and I would probably be dead well before I turn 90. Turns out I had to replace it at age 56. My heirs might have a leaky roof to deal with if I live to be 90. Maybe it will be smart at the time to get a home equity loan instead and make monthly payments and let the estate pay it off in full a few years later when the house is sold if I lived into my 90’s? Anyway, a little planning now might save you from signing a 18% loan from a roofer later as you are catching rain water in buckets.


      2. I am sorry, I didn’t answer my LTC plan. It short and easy. I can’t afford it.

        If both my wife and I are still alive, we will be depending on our family and whatever we can afford in home care. If there is only one of us, the estate is going to have to be liquidated and after that become wards of the state. The sale of the house should cover several years worth of LTC. Hopefully the 4% rule of withdraw will also leave a very large chuck of principle in our IRAs too before the house needs to be sold.

        Neither my wife or I have any desire to be warehouse in a nursing home but sometimes that is out of one’s control. But that is not a plan either.


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