Figuring out retirement expenses


Q: I always find that financial planners do not make clear about upcoming expenses; they mostly talk about more and more income. For example, a statement like “you need 80 percent of your current income” — I never understood this figure. It looks like all financial advisers assume this figure.

In a recent article, you advise a reader that she needs an income of $72,000. How do you come up that figure? Does it include mortgage payments? Say, $20,000?

A: I can’t possibly tell you what your desired life expectancy in retirement will cost; that’s something you’ll need to figure out. In the hypothetical example I contrived in my column, I determined that “Jane” could safely plan to spend $72,000 per year in one scenario. I didn’t use a rule of thumb or a budget to get this number, just some very rigorous probability analysis.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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