How much money do you need when you retire? The reason it’s so hard to determine the right amount is because it’s different for everyone.
Experts say to plan for a yearly retirement income of 70 percent to 80 percent of your pre-retirement income. That’s because you’ll have fewer expenses—you won’t be commuting to work every day, for starters. You won’t be paying social security or Medicare taxes. And you won’t be saving for retirement anymore.
Some financial planners think that mentally preparing to “spend” 80 percent of your salary per retirement year is too high, and that it encourages you to overspend as you get used to life in retirement. They have a point, but a benchmark like this gives you a goal to work toward.