Income Replacement Ratio Calculator
Retirement income as a percentage of pre-retirement income.
Calculate the replacement ratio between your pre-retirement income and expected retirement income. Free calculator with the working shown and a worked example.
What this tool does
Financial planners aim for 70-85% income replacement in retirement — enough to maintain lifestyle without the work-related costs of the earning years. Enter pre-retirement income and expected retirement income. The tool returns the replacement ratio.
Enter Values
Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
60,000 pre-retirement income dropping to 45,000 in retirement is a 75% replacement ratio — squarely in the healthy zone. Retirees need less because commute costs disappear, mortgages often end, and working-age expenses (professional clothes, work lunches, childcare) stop.
What the result means
Primary is the replacement ratio. Below 60% usually means significant lifestyle adjustment; 70-85% maintains lifestyle; 100%+ is often unnecessary (retirees typically spend less).
Why 70-85%?
Post-retirement, many expenses drop: commuting, work clothes, work-related food. Mortgage often paid off. Pension contributions no longer needed (already accumulated). Holidays and healthcare may rise, but net typically 15-30% less is enough. 70% is the commonly-cited floor for comfortable retirement.
Quick example
With pre-retirement income of 60,000 and retirement income of 45,000, the result is 75.00%. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.
Which inputs matter most
You enter Pre-Retirement Income and Retirement Income. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.
What's happening under the hood
Simple ratio: retirement income divided by pre-retirement income, expressed as a percentage. Both figures should be gross or both net — don't mix. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.
The annual review habit
Plug new numbers in every year. Income changes, expenses shift, markets move. A plan that isn't revisited quietly drifts out of date. This tool is cheap to re-run — so re-run it.
What this doesn't capture
Real plans get re-run against new information every year or two. The result here is a reasonable direction, not a destination. Treat it as a starting point for thinking, not a commitment to a specific future.
Your income replacement ratio is shown above.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Simple ratio: retirement income divided by pre-retirement income, expressed as a percentage. Both figures should be gross or both net — don't mix.
Frequently Asked Questions
What's the target ratio?
Gross or net?
Does this include state pension?
What's a realistic retirement income?
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