Williams, F. L. & Zhou, H. (1997). Income and expenditures in two phases of retirement. Financial Counseling and Planning, 8 (2), 75-82.

Williams, F. L. & Zhou, H. (1997). Income and expenditures in two phases of retirement. Financial Counseling and Planning, 8(2), 75-82.

Income And Expenditures In Two Phases Of Retirement

Flora L. Williams⁽¹⁾ and Helen Zhou⁽²⁾

The replacement rate - the ratio of retirement income to pre-retirement income -- is a key part of retirement planning, yet common advice is not based on research. This article reviews previous empirical research and statements by financial planners, and presents an empirical analysis of consumer expenditure data. Expenditures in the first phase of retirement were 71% and in the second phase were 50% of pre-retirement income. These replacement rates should not necessarily represent a goal.

Key Words: Financial planning, Retirement planning, Consumer expenditures, Replacement rates

Unpublished appendix with regressions (Acrobat format)
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1. Flora L. Williams, Associate Professor, Family & Consumer Economics, Department of Consumer Sciences & Retailing, Purdue University, West Lafayette, IN 47907-1262, Phone: 765-494-8297. E-mail: floraw@purdue.edu
2. Helen Zhou, Consultant, Deloitte & Touche LLP, 700 Walnut St., Cincinnati, Ohio 45202, Phone: 513/651-5436