Posted in Triplett & Carothers on September 3, 2026
As a rule of thumb, your annual income in retirement should be 70% to 80% of your preretirement income. But when retirement is not imminent, it can be hard to calculate that amount, not least of all because it can be hard to project how your income might change over the years.
Generally speaking, in retirement you’ll rely on a combination of savings, Social Security and pension income. How much you can save and how you save it will evolve as you change jobs, add to your family and endure stock market ups and downs.
Making plans
You can start making plans by using retirement planning calculators. The ones available on 401(k) sites will help you figure out how much money you are likely to have at retirement given your current savings rate and expected investment returns. If you invest prudently and successfully avoid penalties and fees, both of which reduce your investment returns, you will be on a good path to building a nest egg. Be sure to compare fees when selecting investments: Even a 1% fee can cost you tens of thousands of dollars over 30 years.
The Social Security Administration also has a retirement estimator that will approximate your future Social Security benefits based on your personal earnings record. It’s important to remember that the amount of Social Security benefits you receive will depend on your lifetime earnings and the age at which you start collecting benefits.
If you have a pension, you will qualify for monthly benefits based on your years of service, salary and age at retirement. All or some of your pension may be guaranteed by the federal government, and various options for your payments may be available. Contact your HR department to find out how much you can expect to receive.
You can also consider working in retirement. If you are able to continue employment after you retire, you’ll rely less on your savings — or at least delay using those funds — allowing more money to be available when you need it. With more companies allowing remote or flexible work arrangements, you may find that working in retirement is a fulfilling way to spend time while earning extra income.
One way to add to savings is to dedicate some or all of any raise or bonus to your retirement account. This will help you stick to your budget without getting used to extra income and help you add to your savings without making further sacrifices.
Thinking ahead
Here are some questions to ask yourself as you plan for retirement:
- At what age do you expect to retire? If you plan to retire early, you will want to save more money to ensure your savings will last for a long time.
- How do you envision your life after working? Think about your day-to-day budget and your retirement dreams.
- What about life expectancy? Consider your family history and current health when thinking about how much you’ll need to save.
- Are you accounting for inflation? Everything — from big-ticket items such as houses to small things like a pack of gum — goes up in cost over time, but not everything goes up in value. Using a simple rule of thumb called Rule 72, if the inflation rate is 4% a year, prices double in 18 years. At 3% a year, prices double in 24 years. Use an inflation calculator to see more precise numbers.
The power of compound interest
If you are able to save regularly — even small amounts — as time passes, you’ll notice that what you have contributed has grown substantially. That’s because you have taken advantage of compound interest. Compound interest describes what happens over time, as both the amount you initially invest and the interest it earns start earning interest together. For example, if you invest $100 with a 10% annual interest rate, you’d have $110 after one year. In the second year, you earn 10% on $110, giving you $121. Compound interest makes your money grow faster over time.
Your retirement goals are crucial to planning your retirement income. It may be helpful to get guidance from a professional financial adviser, who can help you plan how much to save now so that you’ll be comfortable later.
Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.
©2026