A lurker with a retirement question

[lifesapeach]

I've just started lurking here and you all have inspired me to actually calculate how much I need to save for retirement and college for my kids. I have been playing with calculators and I'm a little confused.

How do you interpret this sentence?

In retirement, you will need $87,500 a year in income. (Because of inflation, in 2047, that will be equivalent to $239,041.)

Doesn't that mean I need to be planning to spend roughly $240k a year in 2047? I'm playing on CNN's calculator, and then it shows me withdrawing $87k for a year in my retirement years. Which number should I be shooting for?

[lifesapeach]

Never mind, I played around with another site and I was right, I need $240k a year. I can't figure out why the CNNmoney calculator shows me only withdrawing $87k a year at retirement. Strange.

[makingithappen]

Jan 7, 2013 17:06:31 GMT -5 RockNVoll said:

Yes, that means $240K in 2047 dollars = $87.5K in today's dollars. I wonder what assumptions you put in because that seems like a pretty high yearly need.

Don't they usually automatically do 70-80% of your current income? That seems pretty easy to get to 87k although I'm sure people making 100k could easily do with less in retirement.

[lifesapeach]

Jan 7, 2013 17:06:31 GMT -5 RockNVoll said:

Yes, that means $240K in 2047 dollars = $87.5K in today's dollars. I wonder what assumptions you put in because that seems like a pretty high yearly need.

Yes, it assumed 70%. Our income is $125k and it calculated it is $87.5k, but I would imagine we wouldn't really need that much. It's just really strange to me that they subtracted that $87.5k number. They also didn't add in raises. I like the MSN tool much better.