Estimating Your Retirement Income Needs

Use Your Current Income As A Starting Point

It’s common to take a percentage of your current income and assume it will suit your lifestyle for retirement. The problem with this approach is that it doesn't account for your specific situation. If you intend to travel extensively in retirement, for example, you might easily need 100 percent (or more) of your current income to get by. It's fine to use a percentage of your current income as a benchmark, but it's worth going through all of your current expenses in detail.

Project Your Retirement Expenses

Your annual income during retirement should be enough (or more than enough) to meet your retirement expenses. That's why estimating those expenses is a big piece of the retirement planning puzzle. To help you get started, here are some common retirement expenses:

Food and clothing                                                             Education

Housing                                                                             Debts

Utilities                                                                               Savings and investments

Transportation                                                                    Recreation

Insurance                                                                           Care for yourself, you parents, or others

Healthcare costs not covered by insurance                      Gifts

Taxes                                                                                  Miscellaneous


Don't forget that the cost of living will go up over time and your retirement expenses may change from year to year. To protect against these variables, build a comfortable cushion into your estimates.

Decide When You’ll Retire

To determine your total retirement needs, you need to estimate how long you’ll be retired. The length of retirement will depend on when you plan to retire. Retiring at 50 will end up costing you a lot more than retiring at 65.

Identify Your Sources of Retirement Income

Your employer may offer a traditional pension that will pay you monthly benefits. In addition, you can likely count on Social Security to provide a portion of your retirement income. To get an estimate of your Social Security benefits, visit the Social Security Administration website ( Additional sources of retirement income may include a 401(k) or other retirement plan, IRAs, annuities, and other investments. The amount of income you receive from those sources will depend on the amount you invest, the rate of investment return, and other factors.

Make Up Any Income Shortfalls

If you're lucky, your expected income sources will be more than enough to fund even a lengthy retirement. But what if it looks like you'll come up short? Don't panic--there are probably steps that you can take to bridge the gap. A financial professional can help you figure out the best ways to do that, but here are a few suggestions:

• Try to cut current expenses so you'll have more money to save for retirement

• Shift your assets to investments that have the potential to substantially outpace inflation

• Lower your expectations for retirement so you won't need as much money

• Work part-time during retirement for extra income

• Consider delaying your retirement for a few years


Opinions expressed are those of:

Rick Hadrava

Senior Vice President, Investments 

Raymond James & Associates, Inc.
1101 N. Broadway Ave., Ste. 200
Oklahoma City, OK 73103

This information was developed by Broadridge, and independent third party.  It is general in nature, is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security.  Investments and strategies mentioned may not be suitable for all investors.  Past performance may not be indicative of future results.  Raymond James & Associates, Inc. member New York Stock Exchange/SIPC does not provide advice on tax legal or mortgage issues.  These matters should be discussed with an appropriate professional.