The Income Replacement Ratio is a financial metric used to determine the percentage of a person's pre-retirement income that is replaced by retirement income sources. It helps individuals assess whether their savings and investment strategies will provide sufficient income to maintain their standard of living in retirement.

Income Replacement Ratio

Financial metric

Pre-retirement income

Retirement income sources are essential for financial stability in retirement, typically comprising a combination of Social Security benefits, employer-sponsored retirement plans, personal savings, and investments. Effective planning and diversification of these sources can help mitigate risks and ensure a steady income stream to cover living expenses throughout retirement.

Retirement Income Sources

Savings and investment strategies

Sufficient income

Standard of living refers to the level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area. It is a multifaceted concept that encompasses income, employment, class disparity, poverty rate, housing affordability, and hours of work required to purchase necessities.

Concepts

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