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We assume all current income under the Social Security earnings cap, other than “other income” listed in Advanced, are earnings from work subject to payroll tax.
We estimate state and federal income taxes at age 65 using data from TaxSim and our estimate of the portion of your Social Security benefits subject to tax.
If your projected retirement income is less than the income needed to hit your target, we assume the income needed to hit your target will be drawn savings and subject to tax. (Your tax will be less if you get more of your income from Social Security or from downsizing or a reverse mortgage.)
We pay off the mortgage once you retire, as experts recommend.
Health Care Expenses:
We estimate a $150 per person monthly increase based on a $200 current expenditure and a $350 expenditure in retirement (Munnell, et al. 2008. Health Care Costs Drive Up the National Retirement Risk Index, Center for Retirement Research, Issue Brief 8-3).