INFLATION & RETIREMENT

Physician's Money Digest, August15 2003, Volume 10, Issue 15

When you hear money expertssay that you will need about 70% to80% of your preretirement income toretire comfortably, be aware thatthey're referring to how much youearn right before you retire. Assumeyour current income is $150,000,you still have 20 years until retirement,and your income matches amild inflation rate of 3%. Just beforeyou retire, your income will be morethan $260,000, which is the figure touse in your postretirement incomecalculations. In addition, most estimatesthat peg retirement incomeneeds at 70% to 80% assume thatyour mortgage is paid off and thatyour lifestyle will be less lavish than itwas before you retired.