How much income should you plan on needing when you retire?
A financial-planning rule of thumb is to figure on needing 70% to 80% of your pre-retirement income. That income is the income you’ll be earning at the time you retire, not the amount you’re earning now.
In doing your projections, be sure to consider the dramatic effect inflation can have on earnings and expenses. Once you’ve determined your retirement income needs, you need to plan for meeting those needs. The most advantageous way to invest for retirement is to take advantage of various opportunities to defer or avoid federal income tax on retirement investment earnings.
