How Much Money Do You Need to Retire? By Tammy Flanagan For - TopicsExpress

How Much Money Do You Need to Retire? By Tammy Flanagan For many years, magazines, newspapers and other media have promoted a rule of thumb for retirement planning: To retire comfortably, you must be able to replace 80 percent of your pre-retirement income. Over my years of teaching pre-retirement classes, I’ve observed that many employees are closer to the 80 percent threshold than they think, once they add up all of their sources of retirement income. The 80 percent figure stems from "replacement ratio" studies conducted by Aon Consulting and Georgia State University for 20 years, in which researchers cull data from the Bureau of Labor Statistics Consumer Expenditures Survey, which details how U.S. consumers, including older households, spend their money. The study relies on gross pay, and assumes that after you retire, the withholdings for retirement from your salary will cease and you will pay less income tax on your retirement income than you paid on your salary.