Money Talks, So Should You

Q&A: What is the annual cost of retirement?

Deborah Frazier
by Deborah Frazier, NAPFA

Although this is an individual figure, there are some rules of thumbs to consider. Most analysts say that you will need 75 to 80 percent of your paycheck to live in retirement.

READ: How much does retirement really cost?

Do not use the gross salary; use what you get in your paycheck each month. That is the amount of money you are living on. Subtract any pensions or Social Security from that retirement amount and that is what is needed to live on from financial resources. An example might look like this:

Net Salary/month: $4,800

80 percent = 3,800

Minus Social Security = 2,250

Plus income taxes = 760

Withdrawal needs = 2,310

 

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Deborah Frazier has been a fee-only financial adviser since 1986. Frazier is a member of the National Association of Personal Finance Advisors (NAPFA), a fee-only professional association and a Dimespring knowledge partner.