Sean Pyles

You can live off 80% of your pure retirement income in retirement.

And we'll break down whether that 80% rule is still useful.

But just to lay things out really clearly to start, can you explain why planners have used 80% as a benchmark historically?

There are critiques on both sides of the 80% rule that it might be too much or too little to live on.

What do you think about that?

That seems like a smart way to plan.

I always like to be a little bit more conservative and save more than you might think you would even need.

That way you have a cushion, right?

And our listener pointed out some key reasons why 80% might not be enough, notably healthcare costs and inflation.

A report from Fidelity found that retirees may need more than $170,000 just to cover healthcare costs in retirement, assuming they retire starting at age 65.

And I'll add that a lot of retirees may have a big surge in spending right when they retire because they might be traveling a lot and taking advantage of this newfound freedom while they're still healthy.

I also imagine, kind of like you said, James, that spending isn't level from one year to the next, which can compound the questions of how much to spend and how much to save.

So how do you think people should try to get an accurate plan for their retirement spending, given all of these uncertainties?

So James, when you're working with clients, do you tend to steer people toward one or the other?

I imagine that actually giving people the option of which to choose might not be the best idea.

I think people find these rules of thumb so appealing because they give people something to latch on to when these variables might be really hard to follow or confusing if they're doing it on their own.

And when it comes to something like planning and actually executing your retirement, I just think these rules of thumb are too simplistic.

That's why I'm a little annoyed by them when it comes to kind of boots on the ground financial planning.

But just to get people started and thinking about how much they might need to save, I think it's a decent jumping off point.

100%.