What The Experts Say
Some so-called financial experts say you need 70 percent of pre-retirement income after retiring, while others claim its 80 percent, 85 percent or 90 percent.
Then, there are those (financial gurus) who advocate what is called the 4 percent rule. It simply holds that if you withdraw no more than 4 percent of your
portfolio in the first year of retirement and then increase that amount for inflation each year, your money should last at least 30 years.Yes, it gets that ludicrous sometimes. Whatever it is, I would ignore it - if I were you. One could only wonder if these experts are allergic to reality.
Real Life
May be our seminar attendees and retired clients have been living in a different United States of America. The last time I checked (last night), retirees pay the EXACT same prices – like everyone else - for things like groceries, gasoline, clothing, cable, newspapers and airplane tickets. When they patronize restaurants they do NOT receive a 30-percent discount.
The – I guess unusual- retirees I meet everyday face health care costs that threaten the roofs over their heads. But, to be fair, I must concede: they pay nine bucks for movie tickets that regularly cost $10 – courtesy of senior citizen discount.
Almost everyone desires to do things like, travel the world, have fun with family/friends and live comfortably (you know what that implies).
Exactly how are they going to afford these on the percentages of pre-retirement income suggested by the “experts”? Or, since they are the “experts” we should shut-up and believe (it’ll be wiser to hope) things will turn out exactly as prescribed?
Try This
I’m not asking you to agree with me. But, may I suggest a really simple, common-sense, real-life approach to gauging the kind of income you’ll need in retirement? I mean here in this United States.
- Decide (with some specificity) what you desire to do in retirement. (If you still don’t get my point after this, steps 2 and 3 below will nail it home).
- Locate a retiree who is doing the stuff you desire to do (or at least close).
- Find out how much they are spending?
I bet you’ll conclude that to survive on the percentage(s) of pre-retirement income the experts are trumpeting you MUST be the greatest magician of all time. Hey, if that’s you please let’s talk.
One could only wonder how in the world some financial planners use these overly simplistic doctrines. I couldn't agree with you more. It takes some reality and common-sense as you point out to plan for something as critical as retirement.
ReplyDeleteThanks for your views.Great
I think that belief comes from the thought that when you retire your expenses drop...such as, use of auto upkeep including gasoline and oil...cuz we are "at home" all the time. Ladies do not need so much makeup, perfume, stylish clothing...all the girlie stuff. Of course, that belief is a misnomer. Cars still need servicing, gals still need makeup and frou-frou....except.. well....just less of it. The elderly have lived in poverty since the dawn of man. In some countries the elderly are honored for their years of experience and knowledge.....but that ain't so in the USA. In the USA WEeeeeee are a burden to those smart, savvy, intelligent young folks who know everything. If you don't believe youth's importance, watch TV and/or pay attention to advertising and packaging today. Sometimes I cross my eyes at youth worship. We have worked so hard to make kids feel that they are valuable people....to the point that we, the teachers, are valuless. Open any clothing catalog. The styles are teeny-bopper--melted-and-poured into. Women over 50 have to shop endless hours in stores to find something calmer and more appropriate for a 50 and plus aged woman. For a long time I thought Mexicans had taken over the USA....every single restaurant served only foods loaded with peppers and spices that killed the palette and the gut....catalogs sold red-hot mama clothing on models wearing 3 - 4 inch stilletos. YeeeeeHaaaaa. Being elderly just isn't for the faint-hearted today. It's just as well we cannot afford restaurants and clothing once we retire. We would just be ill and look like tarts upon arrival at a drug store to pick up maalox.
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