Any length you like is the answer! If you have a favourite T- shirt to hand then measure from the underarm seam to the hem to judge where to cut yours. If you measure from the underarm then it doesn’t matter if you’re comparing a set in sleeve to a raglan sleeve.
For a traditional boyish sleeve you’d cut straight across at this point. Or you can curve in towards the sleeve slightly. I’ve made a short sleeve dress for my daughter using this pattern where the hem of the sleeve was pretty much on top of the underarm seam and the sleeve had a fair scoop into it. For my son, about 2-4 inches from the underarm and straighter across.
You can always cut it a bit longer and then trim to fit once you’ve sewn it up.
have fun with it!