Do I really need 70% or 80% of my pre-retirement income?

I often read that one should aim for replacing 70%, 80%, or even higher of their pre-retirement gross income. Does that apply to high earners also?


I track my spending meticulously. I'm 55 years old and divorced. Of my GROSS income, these things are spendings that will DISAPPEAR when I retire, with what percent of my gross income went to them in 2021:


  • Retirement savings - (I won't need to save for retirement when I'm retired!) - 14% (does not count employer part, only what comes out of my paycheck)
  • Mortgage (will be paid off on my 65th birthday) - 20%
  • Alimony (also ends on my 65th birthday) - 5%
  • Extra money I was able to sock away - 4%


That right there is 43% of my gross income. So at most, right now I'm living on 57% of my salary (and live pretty nicely with trips, meals, home furnishings, etc.)


Also, I spent 28% of my income on all income taxes (not property tax). Obviously, that will go down as a percentage when I retire and am in a lower bracket.


Looking at it another way, of my TAKEHOME, I spent 50% on mortgage, alimony, and extra savings put away - again 3 things that will disappear when I retire, leaving 50% for everything else.


Since I have such good data, can I aim to have gross retirement income that will generate, after taxes, what I'm spending annually now that isn't in the categories above?

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Trusted Contributor

Well, that depends primarily on three things:

1.  Will you continue the same lifestyle in retirement?

2.  Will your health continue to be good?

3.  Will inflation remain low and your spending take this into account?

Only you can answer 1 and 2 and I don't think anyone can answer 3.

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