Written By: Flora L. Williams and Helen Zhou
The replacement rate ý the ratio of retirement income to pre-retirement income — is a key part of retirement planning, yet common advice is not based on research. This article reviews previous empirical research and statements by financial planners, and presents an empirical analysis of consumer expenditure data. Expenditures in the first phase of retirement were 71% and in the second phase were 50% of pre-retirement income. These replacement rates should not necessarily represent a goal. Key Words: financial planning, retirement planning, consumer expenditures, replacement rates
Download Journal