What retirement income you really need to be secure

The goal for retirement savings should be to accumulate sufficient assets that can generate 100% of your pre-retirement basic salary.

That 100% includes any Social Security benefits for the household. Let’s say you earn a base income of $65,000. If you use a steady withdrawal percentage to generate your income – 4% say, you need to accumulate assets of $1,625,000 – but don’t panic yet.

If you are married, your Social Security household income will be about $34,758 in todays dollars. That means you need to replace only $30,242. To do that you will need about $756,050 in investments assuming you use 4% of those investments each year. Remember, those are retirement savings.

There is no reason you cannot accumulate other assets, even modest amounts, over your working years that then allow you to supplement your income with dividends and interest as needed.

Everything you can do and want to do is relative to your income and lifestyle and that means controlling spending is as or more important than income.

Don’t need 100% income replacement you say, you can live on much less in retirement, you say?

Maybe yes, maybe no. Does being able to live on much less, allow you to live anyway you desire? Can you have fun they way you would like? Can you handle any financial emergency living on much less?

Here’s the deal, 100% income replacement is a goal. If you make it and I’m wrong, then you have extra money to spend. If you set a goal of 60% or 70% income replacement and you are wrong … we’ll, there is no do over.


  1. More is always better. I think 100% income is a very strong goal. Those of us that live through the late 1970s and early 1980s know what inflation can do. For the past decade or so, I think some people forgot. When I first retired I “needed” less income. I still spent everything on things I wanted and wanted to do. About two years ago, I noticed that my money was getting tight. Inflation had started. Two years later, my spending power has decreased by 14.4% I have started restricting some of our wants. Two more years of this Inflation, I’ll be spending at 100% with the spending power of when I retired.

    More never hurts.


  2. I do agree that more money accumulated in retirement is better than less. The 100 % of income is as good a target as any but for folks who aren’t going to hit that target I would encourage them to continue to do as best they can.
    I’ve been retired for well over 10 years and the relationship between current spending and last income earned before retirement is nonexistent. I pay less fed income tax, much less state income tax, less property tax, no payroll tax and I don’t have the 10-15% of savings taken from my monthly income. All this taken together with no mortgage payment and no child rearing costs means more disposable income. So yes, more savings are better but there is hope for those who don’t hit the target.

    Liked by 1 person

    1. But you spend money on discretionary things? Haven’t those “savings” been replaced by other things? Did you relocate of downsize?


      1. We spend approximately one third of our income as discretionary. Inflation, while very noticeable, hasn’t curtailed our spending thus far.

        We have moved, not out of state, but to a county that gives older people a property tax break and our house is comparable in value to where we lived while working.

        I think the big driver of our income has been our lifestyle was simpler while earning a combined 150k per year more than 15 years ago, thus our retirement savings were very substantial comparatively. If our income had been 65k for example, we would be talking a very different and much less comfortable retirement.


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