There has been a trend in retirement planning that I don’t particularly understand, the trend is propagated by the main stream financial companies/publications that look for easy answers that are not so easy.  In retirement planning you don’t need 50%, 60%, 70%, 80%, 90% or 100% of your pre-retirement income.  During retirement you need the amount that your budget dictates.

Retirement isn’t a Switch

I am all about optimizing your spending or making yourself more efficient, but for the most part I follow the ramit technique – i.e. $4 lattes don’t matter as much as larger wins.  Notwithstanding as retirement rolls around you are looking at somewhere between 20 and 40 years of spending habits behind you.

All of sudden when you turn 60, 65, 67 or 79 those living expenses don’t really change!  Maybe you’ll pay off your mortgage but in today’s world that has nothing to do with your retirement age (it might have mattered more in the past when the traditional 30 year note was given to 30 year olds).  Besides there is an easy offset to that reduction – paying for medical insurance without your company’s backing?

Cutting back on one’s expenses is usually a good idea, especially after you transition to more of a fixed income, however, automatically assuming you are going to spend 30 or 40% less just doesn’t make sense to me.

What about you?