Income Projections

Yesturday I talked about the differences in gross & net income while you are working vs when you are retired. So how should you determine what you should use as a number to project out your income over time and how long your money will last based on certain assumptions about inflation and returns. Three commonly used methods are:
1. 70%of your pre-retirement earnings
2. Do a budget based on actually spending
3. Maximum income to exhaust your money at a set age, say 90

I prefer starting with the budget based approach because it is usually an eye openeing excercise to see what you are actually spending your money on. The only caveat is that it's hard to teach an old dog new tricks.