At least theoretically, one would not need to have as much income per year in retirement as one had while employed to maintain one’s pre-retirement standard of living. For one thing, instead of having to put a portion of earnings away towards savings, one can begin to draw on those savings. For another, lower earnings in retirement are accompanied by a lower tax bite (in other words, the net reduction in after-tax income is less than the reduction in gross income).

Those are among the reasons that a variety of studies have suggested that individuals and households need somewhere between 65 percent and 85 percent of pre-retirement income to maintain their pre-retirement standard of living. The percentage needed to do that is referred to as the “replacement rate.”

Whatever the optimal replacement rate may be (and studies vary), it is generally agreed that lower income households require a higher replacement rate than wealthier households: there are fewer savings to draw upon and less of a reduction in the taxes paid (these households, earning less money, would already have been paying relatively little in income taxes).

According to the Center for Retirement Research at Boston College, “More than one third of households end up entirely dependent on Social Security. For low earners the figure is 75 percent.” For those low earners, Social Security only replaces an average of 40 percent of their pre-retirement income. (According to data from the Social Security Administration, the average monthly Social Security benefit for low wage earners who retired in 2012 at age 65 is $887.33. The overall average monthly benefit is $1,230.)

We were not able to find anyone who suggests that a lower-income household could maintain its pre-retirement standard of living with only 40 percent of pre-retirement income.