# Replacement Rate

*Retirement & Benefits — Finicade finance glossary*

The replacement rate is the share of pre-retirement income your retirement income covers, with 70–80% the usual planning target. The logic behind a number below 100% is that retirement removes payroll taxes, commuting, and retirement saving itself. It's a rule of thumb rather than a finding: someone who paid off a mortgage needs far less, and someone facing long-term care costs may need more.

**Also known as:** income replacement ratio, pension replacement rate

**Related terms:** [Safe Withdrawal Rate](https://finicade.com/glossary/safe-withdrawal-rate), [Social Security](https://finicade.com/glossary/social-security), [Savings Rate](https://finicade.com/glossary/savings-rate), [Full Retirement Age](https://finicade.com/glossary/full-retirement-age), [Defined Contribution Plan](https://finicade.com/glossary/defined-contribution-plan)

Source: https://finicade.com/glossary/replacement-rate