How Much Retirement Income You Need

VIDEO DESCRIPTION

MoneyWatch's Jill Schlesinger does the math for you -- and explains how you can protect against unpleasant surprises.

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VIDEO TRANSCRIPT

How much income will I need in retirement? This is one of the most frequently asked questions 
that I fielded as a financial planner. Most research indicates that during an average retirement 
you'll need 70 to 80% of your pre-retirement income to maintain the standard of living you enjoy 
while working. The reasoning is that you don't need to reproduce your full paycheck because 
you'll no longer have work related expenses like commuting costs and social security taxes. To 
that thinking I would say who wants an average retirement income string? 
There's no magic formula for your retirement income calculation so to protect against unpleasant 
surprises sit down and estimate your expenses yourself. Review your current spending and adjust 
it based on the ways your expenses are likely to change after you retire. 
Sure you may have lower commuting costs but your medical costs are likely to rise too. If you're 
lucky enough not to have a mortgage you may want to spend more on travel and recreation. Take 
pencil to pad and do a little homework after all average is just so average.