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[quote=Anonymous][quote=Anonymous]How does SS income factor in? Let’s say both spouses can expect $3000 or so per month based in the calculator on the SS website. That’s 70,000 per year right there. What am I missing? I  agree with some posters who say that the formulas don’t apply for people with a higher HHI. Right now, 80% of my expenses are child related: private school, lessons, tutors, clothes, hobbies, and more than 50% of vacation expenses as I have to travel at peak season. So I really don’t think that the models apply. In terms of healthcare - I already pay for private insurance and max out all co pays etc. So what am I missing? Honestly, if I need institutional care when I am old, I’ll get it in my home country and not the US. Can’t afford quality care here (and unwilling to spend all my hard earned savings on that).[/quote]

You have to calculate your wage replacement ratio.  This is your current gross income minus things that will go away in retirement, such as savings and payroll taxes.  The big question with the items you mention is whether those will become "savings" or "expenses" after the kids leave the nest.  If they become savings, then you can delete them from your WRR.  But if they become expenses, they add to your cost of living and have to be considered in your WRR.

WRRs are different for each person based on how much they save and how much they spend.  For one person, an 85% WRR could be normal, while 55% might be a good WRR for someone who has a low cost of living and saves a lot.

You can remove SS from your WRR to determine how much you need from investments, but be careful.  Supposedly, Social Security is going to change starting in 2034... so the expected benefit might not be accurate.

Re: Health insurance... don't forget about IRMAA... extra Medicare premium based on your income in retirement.

But the method I mention in my previous post of how to calculate retirement needs works for all income levels.

Greg Caramanica, CFP[/quote]

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