Traditional retirement advice is to plan to have enough income to cover 80 percent of the income you earn while working. That way you will be able to enjoy the same lifestyle.
That advice comes from the presumption that you won't be buying lots of work clothes, spending money on commuting, or contributing to your retirement account. Instead, you will be quietly living a retired life.
But, will you? If you plan to pursue lifelong dreams like travel, hobbies, adventures, or a beach retirement home, you won't spend less. You might actually spend more.
In addition, costs rise over time. For every cost of living increase in Social Security, there is an increase in supplemental insurance. Then there are the expenses with aging parents and adult children and other unexpected expenses.
According to Kiplinger, some financial advisors are recommending that people plan to replace 100 percent of the income. Long before you retire, get a clear picture of how much it costs to run your household, where you tend to spend, and where you can save.
If you plan to work in retirement, you can fund some of your fun expenses, but don't depend on that ability. You can't tell what the future may hold for your health, or wealth.