Affluent May Be Underestimating Retirement Needs

[Katsmeow]

This, on the other hand, seems odd to me (my emphasis added):

The survey also finds that, on average, respondents plan to work until they are 67 years old and expect to live to the age of 86, suggesting that they anticipate living off their retirement savings for less than 20 years. When asked directly how many years they anticipate living off of their savings in retirement, people say 21 years, on average.

Work until 67? Yuck. And they may not expect to live past 86, but if they don't plan to do so they are at severe risk for outliving their money unless the combination of SS and any pensions they may receive are comfortably more than their expenses...

I don't have a problem with the quote. You are talking about what people should plan for while the quote is asking what they expect and anticipate. It is reasonable to expect to live to 86. In fact, that is a little over optimistic for a 67 year old.

Actuarial Life Table

It would not be reasonable to expect to live to 95 or 100. However, it would be reasonable to plan to live to 95 or 100. However, I don't see the quote as saying that people should only plan to live to 86.

 

[bUU]

Methinks these writers, as usual, underestimate the amount of that income that is not spent, but rather saved for retirement. AND they conveniently forget the drop in taxes after retirement - especially with lower income.

I wonder why we don't read many news articles about retirees who have far more money in retirement than they anticipated having.

 

[jollystomper]

I don't know where to start. First of all using current income to project retirement needs is irresponsible to say the least. My DW and I saved over 50% of our income in our peak years and currently live on less than that just prior to retirement. It's all about expenses in relation to income. These clowns can't grasp that there are actually people out there who do not spend every cent they make.
As far as healthcare goes -who knows. At some point you have to take a leap of faith and go for it. I'm getting closer.

+1

We knew to stay clear of one potential financial consultant when they did not want to take into account our living on 60% of our income as a reason why we would not need 80-90% of our income in retirement.

 

[LitGal]

No, I Don't Think So....

I guess the financial #s make my husband and me appear to be "affluent." (Yup, those Fisher Investment reps. worked on us for at least a year, trying to get us signed up ASAP.) But we've never viewed ourselves as better off than middle class.

We easily and happily live on 60% of the pre-retirement income. But we may have some special circumstances that make it possible:

--DH has tracked monthly expenses for several years, detailing our annual expenditures in all areas (so he knew when we could retire);
--We moved to Ohio from high-cost SF Bay Area in '96, tripling our lot and sq. footage;
--Pd. off house in 2000; invested unused mortgage pmt. since then;
--Continual LBYM;
--One of us (sometimes both of us) was/were always fully funding IRA's and 401K's since '85;
--We had only one son--adopted-- who was diagnosed with a brain disorder. So far, college has not been feasible for him. If he eventually does decide to try it again, I'm hoping our savings can help.

We live in a high-tax suburb, and have yet to down-size. (I'm reluctant to move away from the 400-acre city forest behind our house.) But, in terms of the expenses of living here, we don't feel immediate pressure to move.

So, if Grandma were still alive, I'd smile and say, "You were right!" She used to say, "Pay off that house and save your money."

Plus, she taught me how to iron, sew, and mend......even can vegetables (I gave up on that one). And so much of life's goodness comes free.

 

[grasshopper]

I don't know where to start. First of all using current income to project retirement needs is irresponsible to say the least. My DW and I saved over 50% of our income in our peak years and currently live on less than that just prior to retirement. It's all about expenses in relation to income. These clowns can't grasp that there are actually people out there who do not spend every cent they make.
As far as healthcare goes -who knows. At some point you have to take a leap of faith and go for it. I'm getting closer.

Same with Ms G and I, if I didn't have Quicken reports on our spending patterns over the previous 5 year we would still be asking if we could ER.

 

[Walt34]

So much of it varies with the individual. I'm in the middle of reading Jeff Yeager's How to Retire the Cheapskate Way and it is reassuring to know that one can retire and be happy on $1,100/month in SS income.

Not that I'd want to, and barring some catastrophic event we'll never have to, but it does mean that it can be done.

 

[Tadpole]

Like some others here, I live on about 40% of my previous income. This is without trying to be extremely frugal although I do have frugal habits.

I wonder what these writers are going to do after the baby boom passes through. One set of articles say retirees have too much money and society needs to claw some of it back; other articles say they don't have enough and need to work and save more until 70 or death, whichever comes first.

 

[Brett_Cameron]

We are living on 60% of pre-retirement gross income easily.