The key retirement planning number

You’ve probably heard some financial “experts” say that you should work your retirement planning to target replacing 80% of your current salary.

But following that advice can be potentially disastrous for you.

So let’s think about this logically so you don’t make any big mistakes in your financial planning.

When meeting with my fee-only financial planning clients, the topic of retirement often comes up at some point. When it does people often want help understanding what their target goal needs to be in retirement savings.

Using the common “4% rule” it is easy math to take the required income and calculate an estimate of how much will be needed to draw that level of money each year from their investment accounts. The challenge then though is that few people have taken the time to understand what their spending requirements might be in retirement, so they use their current income level as a base.

Sometimes this works but often it doesn’t.

What number actually matters the most when you are planning for retirement? Your annual spending level. How much you spend matters much