Retirement income projections often overstate the amount needed, according to a Morningstar analysis, which suggests that forecast should take a more individual approach.
"There are three common assumptions that many software tools and financial advisors use to come up with a retirement savings goal – a 70 or 80 percent replacement rate based on pre-retirement income, an income need that rises with inflation, and a 30-year retirement time horizon," David Blanchett, head of retirement research for Morningstar Investment Management, said in a news release. "When we looked at actual retiree spending patterns and life expectancy, however, we find that these assumptions don't hold true for many people."
Common reductions in expenses often overlooked include not needing to save for retirement or pay Medicare and Social Security taxes, the analysis said.
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