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Mark Miller: Remaking Retirement

Retirement Spending Just as Important as Retirement Income

Income replacement rules for retirement don't account for one big question: How much will you actually spend?

We've all heard the rule-of-thumb: To retire comfortably, you need to replace 70% to 80% of pre-retirement income. Add a couple of percentage points for inflation every year, and you'll have what you need to meet your expenses in retirement.

But the rule-of-thumb never was meant as a way to think about spending in retirement, says Michael Kitces, partner and director of research for Maryland-based Pinnacle Advisory Group. Instead, it's always been about income.