Your Retirement Needs

Here are 2 ways you can use to make an educated guess at what you will need in retirement:

If you are far from retirement, you can try the wage replacement method: Take your current income and subtract FICA - which is your social security taxes, your retirement contributions, any work costs that you will not be needing to spend on, and what you are paying for healthcare, at least over what Medicare will cost you. This may leave you with 85% or less that you will need to live on in retirement.

If you are close to retirement, you can try the retirement budgeting method: You may have a clearer idea of what your expenses may be given that retirement is right around the corner. Make a budget of the expenses you expect during retirement and then do your best to live on that income for 1 year prior to retiring. This is a good way to see if your plan is doable.