| A
general rule of thumb in
retirement planning is that you
will need 60% to 80% of your pre-retirement
income to maintain your standard
of living after you retire. One
recent study concludes that you
should target the upper end of
that range and then some,
particularly if you are in a
relatively high income bracket.
The
table shows the percentage of
pre-retirement income you will
need (the replacement ratio) at
various income levels, and how
much may come from Social
Security and other sources, such
as your personal savings and
employer retirement plan. The
study was done by the Alexander
& Alexander Consulting Group
and the Georgia State University
Center for Risk Management and
Insurance Research.
These
replacement ratios are for a
married couple and assume that
the wage earner retires at age
65 and has a 62-year-old spouse.
The ratios are generally lower
for single retirees and married
couples where both spouses were
employed.
The
replacement ratios shown reflect
the rise in the maximum tax on
Social Security benefits to 85%
and higher federal tax rates for
upper-income individuals.
How
much income will you need to
retire?
| Pre-Retirement |
%
Needed
for |
Estimated
Retirement |
Source
of
Retirement Income |
| Income |
Retirement |
Income |
%
SS |
%
other |
| $40,000 |
71% |
$28,000 |
62% |
38% |
| 50,000 |
74% |
37,000 |
50% |
50% |
| 60,000 |
72% |
43,200 |
43% |
57% |
| 70,000 |
75% |
52,500 |
36% |
64% |
| 80,000 |
80% |
64,000 |
29% |
71% |
| 90,000 |
83% |
74,700 |
25% |
75% |
| 150,000 |
86% |
129,000 |
15% |
85% |
| 200,000 |
87% |
174,000 |
10% |
90% |
|
|
