Retirement income needs different for everyone


Q: I have always heard/read that to live at the same standard in retirement, you would need to have approximately 80 percent of your salary when
you retire. Although I think I know the answer to my question, I would like to hear your response. My question is: Is it the annual gross pay minus my TSP contribution that I take home to live on, or my annual gross pay before I take out the TSP contribution that one would use for the 80 percent calculation?  For example, I am over 50, so I take out the maximum $16,500 plus my maximum catch-up of $5,500, for a total of $22,000.  Say my annual adjusted basic pay is $80,000 — then would it be 80 percent of $80,000 ($64,000) or 80 percent of $80,000 minus $22,000 (TSP), which
would be 80 percent of $58,000 ($46,400) that you would recommend. I believe it would be the latter, as I am living off of my pay minus TSP.

A: Ignore that ridiculous rule. Rules of thumb don’t necessarily apply to you. Everyone’s case should be treated as unique. I have some clients who need 100 percent of their pre-retirement income, or more, to maintain their standard of living. If you are earning $80,000 per year gross, contributing $22,000 per year to the TSP, making no other savings contributions and borrowing no money to support your living expenses, then your pre-tax income need is currently $58,000 per year. If you’re paying 25 percent of that amount in taxes, then your standard of living is currently costing you about $43,500 per year. If you want to maintain this standard of living in retirement, you’ll need this amount coming in, after taxes, and adjusted for inflation each year after this year.


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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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