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Rescue Your Retirement With 1 Simple Move

It's difficult to plan for retirement, especially with all the uncertainty associated with your future money needs. But just correcting one misimpression can make it much easier for you to reach your retirement goals.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks critically at one common assumption: that you have to replace almost all of your pre-retirement income in order to sustain the standard of living you want. Dan notes that most professionals assume you'll need 75% to 85% of what you earned during your career. But he also points out for those who've traditionally saved much of their income, the more important metric is how much you spent during your career, not what you saved. Just making this one simple adjustment can cut hundreds of thousands of dollars from what you'll need to save, helping many attain a more realistic goal for their retirement savings in the long run.

How to get even more income during retirement
Social Security also plays a key role in your retirement planning, but it's not the only way to boost your income after you retire. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Have general questions about Social Security? Email them to SocialSecurity@fool.com, and they might be the subject of a future video!


Read/Post Comments (10) | Recommend This Article (21)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 21, 2014, at 10:55 AM, Gorm wrote:

    Now retired I've long known life's satisfaction is all about EXPECTATIONS.

    1) Some are on an endless quest for more, better, different and they'll NEVER be satisfied.

    2) Some piss away more $$$ than many earn and have NO IDEA where it went - simple discipline and money management.

    3) Live within your means. Carrying credit card balances is a SURE SIGN you are living above your income.

    4) Before retiring get comfortable with #3 and pay off ALL DEBT. Am amazed at the number burdened by hefty mortgage, car payments. It makes NO SENSE to try living on a "retirement income" when you are STILL PAYING for STUFF you couldn't afford while working, earning.

  • Report this Comment On April 21, 2014, at 11:18 AM, glocker62p wrote:

    So today's solution is to know where you spend your money and plan accordingly. Who'd a-thunk it?

  • Report this Comment On April 21, 2014, at 11:40 AM, DanLef wrote:

    It is unbelievable to me that many seniors aged 60 and older still carry large mortgages on their homes. Pay it off. Having a tax "write-off" of mortgage interest makes no sense.

  • Report this Comment On April 21, 2014, at 12:23 PM, Russl wrote:

    I will be retiring in 2 months. I will be 57 years old at the time of my retirement. I am sure I will work a little on a part time basis eventually but I do not have to. My wife will soon be 60. She is a 4 time Cancer survivor. She is currently fine with no serious health issues. I would be a fool not to retire now and spend time with her. The reason we can do this is simple. We have always lived within our means. We have lived on 50'% of our income for years. We will not have any difficulty living on 35-40% of our preretirement income. We have been practicing. I have a very small pension and we will be paying for all our medical and we still should have it pretty easy. If you are wondering how this could be it is simple. We still live in our small first house that was paid off 20 years ago. We have friends in the same income bracket that have housing expenses 5 times what ours ever were. I have worked in Manufacturing for my entire life and my wife has worked part time in retail. No big income here, just good planning.

  • Report this Comment On April 21, 2014, at 1:06 PM, pns123 wrote:

    Your pre-retirement income has nothing to do with your retirement income needs.

    Obviously you need to very carefully measure the amount of money that you'll need. Then build in a cushion. It is important to get it right.

    But that number has absolutely nothing to do with your salary while you were working; it is meaningless for retirement planning.

  • Report this Comment On April 21, 2014, at 1:42 PM, slncbp wrote:

    I have always saved for my pension and deferred comp when I was a young professional. It always made sense to me. Because of my planning, I will retire at 52 years old to enjoy the rest of my life. I will not be rich, but still comfortable enough to be able to travel to experience life while I am healthy and able. I paid cash for my condo, so expenses will be low and I am fortunate enough to have employer paid health care even in retirement. It only takes smart future planning to be able to quit when you want.

  • Report this Comment On April 21, 2014, at 3:00 PM, 61farmer wrote:

    I think its important not have too much money in traditional IRAs or 401ks . If you are married and one you dies early in retirement the entire sum of their retirement IRA will become taxable to the surviving spouse in the year in which they die. If their IRA or 401k balance is in the 200-500 thousand range that would be a tremendous tax burden on the surviving spouse. I would encourage people to put as much as they can in ROTH iras as possible.

  • Report this Comment On April 21, 2014, at 3:32 PM, goldfish246 wrote:

    I'll be retiring in nine years. For the last 30 years, I've been washing my hair with Ivory soap, never went anywhere, only use mass transportation by sneaking aboard the subway and never heat my house. I have saved up $110,000.

    While I was doing all of that to save for retirement, some Wall Street fat cats were evading taxes, living it up on credit cards, eating steak every night and supporting mistresses in high end hotels by bilking the government and other customers out of billions.

    The hold trillions in offshore tax evading accounts, so they can retire to a private island only they know about.

    Tell me who won?

  • Report this Comment On April 21, 2014, at 7:03 PM, ranchodepato wrote:

    We left a high cost of living state, Colorado, for a low cost of living state, Georgia. Over 62 no state income tax in Georgia on SS or the first 65K of retirement income EACH! Low property taxes and homeowners insurance on our house and $900 a year golf membership for both of us. 100+ rounds a year each. The Florida state line is less than ten miles South. Just blow on down to Florida.

  • Report this Comment On April 22, 2014, at 9:15 AM, flcpa wrote:

    re: 61farmer's post on IRA/401(k) taxation

    The rules regarding taxation to beneficiaries can be confusing, but IRAs & 401(k) balances do not become taxable to a surviving spouse in the year of the owner's death unless the surviving spouse withdraws the entire amount in that year. If the owner was not already taking periodic distributions, the surviving spouse can either withdraw the balance within 5 years beginning with the year after death, or take withdrawals over their own life expectancy. If the owner was taking periodic distributions, the balance must be withdrawn as least as quickly as the owner's existing distributions. See IRS Pub 575 (2013), particularly page 36.

    I do agree that, if you are eligible, contributing to a Roth IRA is a better choice than a traditional IRA.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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