Pre-Retirement Income Numbers Matter

The generally agreed upon replacement rate for income and retirement is about 75% in the financial planning world. Only 22% of people currently approaching retirement age believe they will have enough money to maintain a comfortable standard of living, down from 26% two years ago. The experts suggest aiming for retirement income that's equal to roughly 75% of your working life income.

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Retirement is a new concept in human history, but the way we fund retirement is even newer. After all, the 401(k) and IRA were legislated into existence less than fifty years ago. To assume a millennial or Gen Z retirement will look anything like a boomer retirement might be wishful thinking—so this week, we’re exploring what might be a better way to structure our financial (and life!) plans.

Learn more about our sponsor, TaxAct: https://www.taxact.com/moneywithkatie

Transcripts can be found at podcast.moneywithkatie.com.

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Mentioned in the Episode

The Money with Katie 2023 Wealth Planner: https://moneywithkatie.com/new-2023-wealth-planner
The history of retirement: https://www.theatlantic.com/business/archive/2014/10/how-retirement-was-invented/381802/
1978 legislation on the 401(k): https://www.gpo.gov/fdsys/pkg/STATUTE-92/pdf/STATUTE-92-Pg2763.pdf
Nat Eliason article on Type 1 and Type 2 fun: https://blog.nateliason.com/p/de-atomization-is-the-secret-to-happiness
Replacement rate for retirement income: https://www.troweprice.com/personal-investing/resources/insights/how-to-determine-amount-of-income-you-will-need-at-retirement.html
Bloomberg study on retirement: https://www.bloomberg.com/news/articles/2022-05-24/most-americans-say-1-1-million-they-need-to-retire-comfortably-is-out-of-reach?srnd=wealth-savings-and-retirement
The 4% rule for retirement: https://podcast.moneywithkatie.com/the-most-dangerous-misconceptions-about-the-4-safe-withdrawal-rate/
Average social security check: https://www.bankrate.com/retirement/average-monthly-social-security-check/
The earlier you start investing, the easier it will be: https://ofdollarsanddata.com/go-big-then-stop/
Study on having higher debt when earning more: https://www.washingtonpost.com/business/personal-finance/you-may-be-surprised-by-who-carries-the-most-credit-card-debt/2019/12/20/3ea084e8-20f7-11ea-86f3-3b5019d451db_story.html
Study from American Advisors Group on working in retirement: https://www.forbes.com/sites/palashghosh/2021/05/06/a-third-of-seniors-seek-to-work-well-past-retirement-age-or-wont-retire-at-all-poll-finds/?sh=5bda7b916b95
Compounding interest calculator: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator