Should You Overestimate Your Retirement Needs?

What Will Retirement Be Like

What Will Retirement Be Like?

How much money will you need in retirement?

That’s the ultimate retirement question, right?

Who knows.

There are so many moving parts when it comes to retirement expectations: life expectancy, out-of-pocket medical expenses, inflation rates, investment return, taxes, etc.

How could anyone possibly predict any of these things correctly?

It certainly makes you want to just throw your hands up and say “forget about it”. But we all know that’s a bad move. Not just because it will make you sound like Donnie Brasco.

But because one thing is for certain: you will retire. Or you will at least get to a point where you can no longer work and provide for yourself. And at this point you’ll need to bridge the gap financially until you die.

The question then becomes, what do you want your standard of living to be like during that period? Last week we discussed social security and how it is supposed to replace about 30%-40% of your income in retirement. Could you live off of 30% of your current income? I suspect that most of us could, but don’t want to.

That leaves only one solution: making an attempt at your own retirement savings.

So when you’re playing around with your favorite retirement calculator, thinking about what you’ll need in retirement, I’d encourage you to use long life expectancies, high inflation rates, etc.

Be overly-conservative in your approach. There’s no harm in expecting you’ll need more. Overestimating and then underachieving is better than underestimating and achieving.

Photo by pedrosimoes7.

Last Edited: July 31, 2015 @ 8:32 am The content of is for general information purposes only and does not constitute professional advice. Visitors to should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, FinCon CEO, and husband and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.


  1. Seems like I’ve been hearing in the news lately that Americans aren’t prepared / ready for retirement. Based on that thought process I don’t think one should think they are overestimating their retirement plan. Unless they have stocked to tackle another issue like debt or something.

  2. I do love Donnie Brasco though…