Target (replacement) income should be the amount of annual income that is needed to support the annual expenses (e.g. rent, utilities, food, insurance premiums, clothing, taxes, etc.) of your dependent(s) after your death. Typically, a percentage of the present gross total family income is selected. While the percentage may vary, most financial planners find 70-80% to be a reasonable replacement objective for those earning over $60,000 and for all two-income families. The replacement objective can be somewhat reduced at lower income levels. Do not include any payments that are assumed to be paid off with a lump sum at the time of death, such as the mortgage payment if you are assuming that the mortgage is paid off.
Copyright 2008 Army and Air Force Mutual Aid Association
102 Sheridan Avenue, Ft. Myer, VA 22211-1110
