I came across the Vanguard Retirement Income Calculator when I was reviewing their online portfolio recommendation tool. Here is the calculator: https://retirementplans.vanguard.com/…
I’m a HUGE fan of this, very -easy-to-use calculator.
HIghly suggest you give it a shot.
Just remember the BIG four expenses in retirement:
4. Health care
Now, Health Care moves up the rank as you get older but it never comes anywhere near the cost of housing. So keep that in mind.
I like the Vanguard tool because they also cite the Bureau of Labor Statistics Consumer Expenditure Survey which I cite a bunch in my own analysis.
Be advised, though, Vanguard’s calculator does not include taxes you’ll pay in retirement. So, you’ve got to be wary of that.
Now, you should not assume you’ll be in the 25% tax bracket, (now 22%). But don’t assume you’ll pay 0 either.
Just keep that in mind.
In this episode, we dive even further into the BLS and other research on retirement income.
The Pension Rights Center says the average Social Security benefit per beneficiary is $1,360. While the average asset distribution was $1,542 per household.
They claim less than 30% of retired households have pensions and less than 7% have VA benefits. And the average earned income in retirement is $25,000.
The BLS provides this table:
Age of Household Median Income Mean Income
Households Aged 55-64 $62,802 $89,986
Households Aged 65-74: $47,432 $68,905
Households Aged 75 and Older: $30,635 $45,989
Notice the difference between median and mean. IT’s HUGE! We want to look at the median when we can as opposed to the mean, i.e., average
In the video, we’re going to dissect the income sources AND, as always, the tax consequence of having income from various sources.
Again, using the Tax Foundation handy-dandy calculator, you’ll see very quickly that depending on how where your income is from has a drastic affect on the tax you pay.
So, for those who do not want to watch the video, the crib note recommendation: Delay Taking Social Security Until You Are 70!