How Can I Estimate the Income I'll Need in Retirement?
How much money do you make? That's a fairly easy question.
OK, now how much money do you spend? That one's a little tougher. What exactly counts as spending? Are we including taxes? If you're paying down a mortgage, is the principal portion considered spending? What about your kid's tuition payment from the 529 account?
As you can see, it's usually easier to think about your money in terms of your income rather than your spending. That's why your income replacement rate -- the percentage of your preretirement income before taxes that you'll need to support your lifestyle in retirement -- can be a useful planning tool.
This simple metric, which doesn't require you to
