INCOME REPLACEMENT RATIO
To project an income replacement ratio (IRR), we will need to how much income you might be earning at the time of your retirement. Assuming a 3% increase in salary, enter the inputs below to estimate pre-retirement income, which will serve as a starting point for IRR adjustments. Fill out the inputs and click NEXT to view future income projections.
Most financial service firms use a strategy called an income replacement ratio (IRR) to estimate your necessary retirement income. An IRR basically assigns a percentage of your pre-retirement income as a foundation for your annual retirement needs. Standard IRRs are around 80%. This essentially means that if you were living comfortably on $100,000 the year you stopped working, you would need to generate $80,000 annually during retirement to maintain that standard of living. IRRs can vary depending on a retiree’s lifestyle. While a 65% IRR may work for some, others may need 90%.
