Replacing Income in Retirement

That much?

The AON study saying one needs 77-94 percent of your final salary to retire comfortably leaves a few things out. In my case, I save 15% in my 401(k), my mortgage consumes a modest 14%, my daughter's school expenses amount to around 4%, and I contribute (along with just about everybody else) 7.65% of my pay to Social Security and Medi-Care. When I retire, I will no longer pay for my daughter's upkeep, my mortgage will be paid off, I won't contribute to SS because I won't be working and I will have no need to save 15% toward my retirement because, duh, I'll be retired. That means I can live the lifestyle I live now while working on (drum roll please) 60% of my income! That's a long ways from 94%!! Oh yeah, and I'll be in a lower tax bracket so that shaves another few percentage points off the total. When I take Social Security at age 70, it will replace some 40% of my income leaving me to cough up just 20% out of savings and pensions. I say the future is so bright, I gotta wear shades!

Morale of the story: Don't let the financial companies tell you you need a fortune to retire.

Dave of CA @ Sep 08, 2008 23:36:30 PM

Social Security

I find the likelihood of their being any sort of social security left when I retire very very slim. For anyone under the age of about 40 I wouldn't bank on their being social security when you retire. Then again when you think about it, the system was never meant to support people for 20+ years. When social security was established people worked basically until they died. I obviously do not plan on working until I die (unless you define work as playing golf and drinking coronas on a beach, in which case, Im in) but I don't expect there will be government assistance there when I do retire.

As far as that Hewitt estimate: scarily enough I wouldn't put that too far off...

Jesse(The Penny Saved) of CO @ Aug 12, 2008 12:13:25 PM