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How do you determine my recommended retirement spending?

We estimate your recommended spending by first estimating your current spending based on transactions in linked accounts or your annual income if transactions are unavailable. We then adjust your current spending to reflect your needs in retirement by using an age-adjustment factor derived from the academic literature on how spending needs change. Specifically, we estimate those factors using  on spending data of workers with a college degree in the Consumption Expenditure Survey We assume clients below age 25 will need 174% of their current spending in retirement, and that factor decreases to 100% at age 39 and to 88% for clients 47 or older.

Age

% of Spending Today Needed in Retirement

>=47

87%

46

88%

45

89%

44

90%

43

92%

42

94%

41

96%

40

98%

39

101%

38

104%

37

107%

36

110%

35

114%

34

118%

33

123%

32

128%

31

133%

30

139%

29

145%

28

152%

27

159%

26

166%

<25

174%

In case the calculation above indicates a retirement spending is below $2,000 per month, we make the conservative suggestion of $2,000 in retirement spending.


For more details on our methodology, please log into your account and review the Path disclosures.

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