If you’re tracking your retirement investments at all, you probably noticed some sizeable gains in your 401(k) or IRA last year. That’s good news.

But what if we told you that those bigger savings are expected to generate less income in retirement than the smaller nest egg you had at the end of 2013?

That counterintuitive result is, unfortunately, exactly what we found for retirement savers in their 50s and early 60s in the fourth quarter’s CoRITM Retirement Indexes Commentary.

But there is a potential solution: Investors need to shift their main focus to retirement-income costs, and quit fixating on their “number” – the amount people think they have to save to safely give up their day job.

In the past, when many workers had pensions, and people who depended solely on their own savings felt more confident that their money would last if they stuck to the 4% rule, focusing on a lump-sum savings goal seemed (relatively) safe.

But now, with many investment experts arguing that market volatility is here to stay, and low interest rates all but wiping out returns on money-market funds and certificates of deposit for much of the past decade, we need a new benchmark for retirement saving. We need to shift our focus away from the total value of the nest egg, and instead toward the annual income it could provide.

It’s an approach that Morningstar columnist John Rekenthaler recently argued for, saying that  there are “three moving parts” when estimating retirement income: The portfolio value (or total return), annuity rates and the time remaining to retirement.

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