Will You Really Need to Replace 80% of Your Preretirement Paycheck?

How much you save for retirement now and how much you plan to spend in the future are two factors driving your personal income-replacement rate.

Piggy bank
(Image credit: Getty Images/iStockphoto)

If you have sought advice on how much to save for retirement, you've likely run across the "80% rule." For a secure retirement, the theory goes, you should aim to replace roughly 80% of your preretirement paycheck with portfolio withdrawals, Social Security, pensions and other sources of income.

Yet recent studies suggest that the 80% rule may be way off the mark for many retirees. People approaching retirement may want to abandon the idea of income-replacement rates altogether, focusing instead on how much they're likely to spend in retirement.

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Eleanor Laise
Senior Editor, Kiplinger's Retirement Report
Laise covers retirement issues ranging from income investing and pension plans to long-term care and estate planning. She joined Kiplinger in 2011 from the Wall Street Journal, where as a staff reporter she covered mutual funds, retirement plans and other personal finance topics. Laise was previously a senior writer at SmartMoney magazine. She started her journalism career at Bloomberg Personal Finance magazine and holds a BA in English from Columbia University.