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Paul Krugman

How much do you need to retire?

The answer depends on a variety of personal factors, starting with how much you need to float your lifestyle today. Because so many people hate the idea of figuring out what they are spending now, they often use an old financial planning calculation to determine their retirement income need: reduce current salary by 20 percent. The rationale behind this strategy is: In retirement, people will no longer be on the hook for payroll taxes, retirement plan contributions or commuting costs. Of course if you are living on far less than 80 percent of your current pay or some of your big expenses will disappear during retirement (mortgage, school loans), you may want to use a lower monthly need....

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