If you rely on one of the many online retirement planning tools to figure out how much money you'll need to live comfortably in retirement, you are probably overestimating what it will take by as much as 20 percent, says David Blanchett, head of retirement research for Morningstar Investment Management.
Blanchett came to his conclusions after reviewing "replacement rate" models utilized by these calculators. Blanchett says the calculators, which usually conclude that you'll need 70 percent to 80 percent of pre-retirement income, rely on the same basic spending assumptions for everyone. But not every retiree will spend money in the same way or on the same things. Also, the calculators don't take into account how life changes over time.