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Think You Need 80% to Retire? Vanguard Says Think Again

Erin Talks Money | Erin Moriarity

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How much income do you really need to retire comfortably? Vanguard’s research suggests the traditional 80% rule may not fit everyone;

You could need anywhere from 40% to 96% of your working income depending on your spending, savings, taxes, Social Security, healthcare, and lifestyle.

In this video, I will explain how to calculate a more realistic retirement income target and avoid oversaving or working longer than necessary.

00:00 - Intro: Why the 80% Retirement Rule Can Be Misleading
00:24 - Vanguard’s Data: How the Replacement Rate Changes by Income
01:51 - Why the 80% Rule Exists: Expenses That Disappear in Retirement
03:30 - Income Isn’t Just Your Portfolio: Vanguard’s 2026 Figures
04:22 - The $22,000 Earner: Where the Rule Underestimates the Need
06:05 - The $42,000 Median Earner: Where the Rule Actually Holds Up
06:39 - The $61,000 Earner: The Rule Starts Overstating
07:56 - Side-by-Side Comparison of All Four Income Levels
08:46 - 5 Reasons the Percentage Falls as Income Rises
11:27 - Real Case Study: Raj and Rani’s Retirement Numbers
14:10 - Why Percentage Isn’t Everything: Dollar Amounts Still Matter
15:03 - The Real Cost of Over-Saving: Trading Years of Your Life
16:16 - Real Spending Data: Single vs. Married Retirees
18:02 - How to Calculate Your Own Number: Step-by-Step
21:20 - Two Common Questions Answered
22:20 - Final Takeaways
23:05 - Closing Thoughts and Outro
23:55 - Bloopers

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20 Comments

@ErinTalksMoney Creator 3 weeks ago Pinned

Retirement planning becomes much more complicated when you move from saving money to relying on it. If you’d like help building a coordinated retirement plan, you can learn more about working with the team at Root Financial here: https://learn.rootfinancial.com/erin

@SumDude-b9i 3 weeks ago

One expense that goes away is the BIG chunk of money you are setting aside to retire.

@TaitSaderholm 3 weeks ago

Has anyone ever noticed that much of the suggestions from the financial marketplace is almost criminally self serving? It took me almost two years of planning on my own for the full realization of how slanted the projections, suggestions and advice actually are. You have to dig DEEP (as Erin often does) to get to reality. That said there will always be (and should be) a big difference between wants and needs in retirement. Make a plan. Make a budget. Know ALL your expenses (EVERYTHING!). Only then can you start the process of separating information that is useful from advice that is serving another master.

@fredbear2648 3 weeks ago

When you save over 50% of every check while working, only needing about 50% makes sense.

@mamatobz2890 3 weeks ago

Perfect timing on this video with 15 days until my retirement ❤❤❤

@dougmarlow4626 3 weeks ago

I tell everyone you won’t need near as much money as you think to live on when you retire. I also tell them to keep a couple hundred thousand in a money market to dip into when you need it. That how you can pay cash for a car take trips an do home repairs and improvements. That how my mom has done it and it works well for her.

@gretchenbond784 12 days ago

I actually thought I could never retire using this rule. I earned over 150k and it was never explained this way to me. I thought I'd have to work until I was 70. Fortunately I was laid off at 65 and researched and learned I could have retired 5 years earlier. Thank you for your great content, I hope it's helping lots of people.

@sdmod1 2 weeks ago

Just do a budget folks !
Stop guessing and put a budget together showing current spending and planned spending in retirement.
There ya go.....simple !

@stephanwolf5075 3 weeks ago

I would be extremely surprised if anyone watching this did not track their spending in detail. 🤑

@BiggMo 3 weeks ago

Depends on your level of pre-retirement income. I’m not a high earner, I have sacrificed to get my 2.3mil. Retirement will … should - cost more. My delayed gratification needs to switch to “gratification”

@chrisr2925 2 weeks ago (edited)

Thank you for the video. This is exactly what I found to be true when I put pen to paper. Once you add up all the things that go away such as savings, taxes on wages especially FICA, house payment, gas to commute and so on it really adds up fast. Our guaranteed income will easily cover essential spending in retirement and the portfolio won't have to work as hard to cover the fun stuff.

@ryanthompson591 2 weeks ago

When i retire, i won't be taking care of kids, that's 70% of my expenses. Probably won't need as much money then.

@mkmac9539 3 weeks ago

As you said at 2:55, comparing retirement income needs/wants to pre-retirement income really makes no sense. As we know, what is needed depends on expenses.

@rickkaiser6637 3 weeks ago

Thank you! Knowing your expenses is the key to retirement success.

@kronsonfamily 12 days ago

Yeah the Vanguard site doesn't even let you attempt to plan out your retirement needs with anything less than 60% of your income. We make over $260k and spend less than $80k. We plan to retire around 55 and wait to claim SS and Vanguard tells me they won't even try to run my plan because I will run out of money before I hit SS age based on what they want me to spend. I hate calculators that assume percentage of income instead of spending.

@mhodge0890 3 weeks ago

I need a lot of money in retirement. I plan on traveling the world and then when I’m not traveling going golfing and various sports venues for baseball, football and basketball. My retirement is going to be 🔥 🔥

@Retired-At-55 3 weeks ago

Retired last year as a high earner. Calculated my retirement budget based on existing take-home income + new insurance costs + taxes. So basically 100% replacement of cash flow during working. Hate to tell you but my spending went UP after retirement. When you can travel any time you want with no time restrictions you do. Living the dream and going to enjoy the go-go years as long as I can.

@Bob-yh7ir 3 weeks ago

We spend 30% of our pre retirement income. Live very well with lots of travel and fun. Everyone will be different as you say and it's important to know your numbers.

@fisherman46viking 3 weeks ago

Wife and my pensions cover all our needs with money left over. When we collect SS it will just be extra. The 457 and roths are all travel. Every November we take the entire years gains and that's our travel budget the next year. We force it. When the market drops, we travel domestic off our pensions until the market comes back.

@sbkpilot1 2 weeks ago

i've always thought that the percentage of income rule was rather silly. How much you need is always based on your actual expenses you expect in retirement which is also not necessarily related to expenses you have while working because circumstances change and some expenses like work commutes and such go away but other new expenses may creep in. So, a retirement budget is it's own estimate - they share some things with your current budget but not necessarily everything.