In “Are you confident about your retirement savings? That could be dangerous,” USA Today and TheMotley Fool discuss a survey that found “38% of retirees say they felt either extremely or very confident in their savings before they retired.” Notice that this is how they felt before actually retiring. It is possible that these same survey respondents felt differently once they had been retired for a while.
As the article notes, this certainty can backfire if those who are feeling confident get lax about money management. Perhaps someone approaching retirement looks at what they have already saved for retirement and think it is okay to make a big purchase, like a yacht. Or perhaps once it seems that they’ve reached a certain amount of retirement funds, someone else will stop saving as they continuously spend more overall—not big purchases, but an increase in everyday spending. While others may look at what they’ve saved, decide it is sufficient, and retire early to start enjoying life more. But will the amount you’ve set aside really be last?
“The average American age 65 and older spends around $46,000 a year, according to the U.S. Bureau of Labor Statistics. At that rate, if you were to spend, say, 25 years in retirement, you’d end up spending roughly $1.15 million – not accounting for inflation.”
You may be one of those who spends decades in retirement, meaning that you could live longer than you imagine. And the complication is that you don’t know what this longer life will look like or what the status of your health will be.
So, while we congratulate you if you have started to save for retirement, we would caution you not to stop once you think you are near or maybe have even exceeded your goal. You don’t know what the future will bring but you do know that as you age your capacity to work may diminish so you want to set aside money while you are able to do so. You can work with a Fee-Only financial planner to set and redefine your retirement planning goals.