What percentage of pre-retirement income do consumers want to spend in retirement?

The so-called income replacement rate concept is often the first step in estimating a retirement savings plan. A 2012 Aon Hewett study suggested that retirees should try to replace 85% of their income during the first year of retirement. Many advisors take an 80% or 85% number for granted. If you earned $100,000 right before retirement, you’ll need an income of $85,000 to avoid cutting back during your golden years. But can one number really be right for all retirees? And does an 80% rule of thumb even make sense?

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