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-   -   How much to save for RE (http://www.early-retirement.org/forums/f28/how-much-to-save-for-re-80144.html)

DrRoy 01-01-2016 07:20 AM

How much to save for RE
 
I am attaching a link to an article on the topic of perhaps saving too much for retirement. I would not say that it applies a lot to me as I am now very close to RE, but I thought it might spark some interesting comments. I have actually started spending more in recent years (on travel) but my savings are still over 15% of income.

So, what do you think of this?

Are You Saving Too Much? | Investopedia

REWahoo 01-01-2016 07:25 AM

From the linked article:
Quote:

The "saving-too-much" theory comes from the notion that financial services providers are scaring investors into saving so they can profit from managing the saved money.
Quote:

While some experts suggest that most retirees will need at least 80% of their pre-retirement incomes to meet retirement needs, the critics argue that this number is inflated.
The above quotes, and the contents of the article in general, have been discussed dozens of times on this forum over the years. That's one of the reasons the following list was created:

http://www.early-retirement.org/foru...ire-69999.html

bingybear 01-01-2016 08:44 AM

Quote:

Originally Posted by REWahoo (Post 1676000)
From the linked article:



The above quotes, and the contents of the article in general, have been discussed dozens of times on this forum over the years. That's one of the reasons the following list was created:

http://www.early-retirement.org/foru...ire-69999.html

Yes the topic has and continues to be covered. But a new year's eve party is always a good place to get perspective. I saw some old friends who have (had) retired over the last couple years with good public pensions... all going back to work. Some sounded like bad planning, others maybe exacerbated by significant personal events (but things you need to plan for when entering retirement).
I did not push for their personal details to understand the retirement failure. One noted he could not get into his retirement accounts without penalties. But since he retired @ 56, I told him that he may be able to tap is 401k. Also that he could tap his IRAs's with a 72T.
So a few retirement failures ... hopefully only temporary. I know others on similar pensions that look like they are doing great... driving BMW's etc.
Estimating spending based on pre-retirement income is missing some critical factors - some of us live above our means and some way below our means. It is critical to get a good estimate of retirement spending that is augmented for retirement needs: travel, added healthcare, etc.
But in the end you will have people who will reduce their spending in retirement and appear to have over saved an others that will increase their spending to the point to exhaust the retirement savings even if they have no unexpected events. This is just part of the emotional side of handling money that we see in everyday life.

REWahoo 01-01-2016 08:54 AM

Quote:

Originally Posted by bingybear (Post 1676024)
Estimating spending based on pre-retirement income is missing some critical factors - some of us live above our means and some way below our means. It is critical to get a good estimate of retirement spending that is augmented for retirement needs: travel, added healthcare, etc.

Absolutely. That's why the second, third and fourth questions in the list of "Important Questions to Answer Before Asking - Can I Retire?" focus on retirement expense changes:

Quote:

2. Are you sure those [actual/tracked pre-retirement expenses] are your expected expenses in retirement? How will you pay for health care? And how much will you pay? Have you gotten any quotes? If you're accustomed to group health insurance through your employer, prepare to be shocked.

3. No, really, did you account for giving money to your children or grandchildren for college or a home or something like that? Or supporting your elderly parents? How about repainting the house, replacing the furnace or roof, buying a new car? If you live long enough, you'll likely do all of these things.

4. Do you plan on any major lifestyle changes? For instance, will you buy a vacation condo on Maui or take up Formula 1 racing? How will this affect your spending?


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