Allard LTD. CPA & Financial Services

(952) 895-0895

Retirement Read Time: 3 min

Retirement Realities

Expectations vs. Reality

Predicting exactly what your retirement will be like is about as possible as a meteorologist predicting the weather correctly every single time. In fact, few retirees find their financial futures playing out precisely as they assumed. But, understanding some of the more common assumptions about retirement may help you get closer to your goal than most.

Do retirees actually “outlive” their money?

Generations ago, as people retired, many did live in dire straits, sometimes “down to their last dime,” which lead to the creation of Social Security. Today, Social Security is still around and a common supplement to one’s retirement strategy. True, health crises can sometimes impoverish retirees, but working with a financial professional may even help you prepare for this hard-to-anticipate cost.

Retiring on 70-80% of your end salary may not be feasible

A quick internet search reveals all sorts of sources instructing new retirees should strive to retire on 70-80% of their end salary, but it can be a tough one to achieve.

Most new retirees often want to travel, explore new pursuits, learn some hobbies, and finally get around to those things they had put off when they were too busy with work. So, in the first few years, some may spend roughly as much as they did before retirement.

For many retirees, median household spending increases on the way to a retirement transition. But, with a smart financial strategy, the annual median household spending in retirement tends to decline gradually after age 65.1

Practice makes perfect, even in retirement

On average, households headed by those older than 65 spend 25% less annually than younger households (a difference of more than $15,000). While health care spending increases in retirement, other household costs decline, particularly transportation and housing expenses.2

Retirement may arrive earlier than expected

Most people retire closer to age 60 than age 70. Believe it or not, the average retirement age in this country is 65 for men and 63 for women. That means you could find yourself claiming Social Security earlier than you expected if only to avert drawing down your retirement savings too quickly.3

Living the life you want

In general, American retirees seem to have it pretty good. A recent survey found that 7 in 10 retirees are confident they will have enough money saved to live comfortably throughout retirement.4

Remain flexible in retirement

Your retirement may differ slightly or even greatly from the retirement you have imagined. Fortunately, it may be possible to create a flexible retirement strategy with the help of a financial professional. It’s never too late to start!

1. TRoweprice.com, 2021
2. BLS.gov, 2022
3. TheBalance.com, 2022
4. EBRI.org, 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

Weighing the Benefits of Prepaid Debit Cards

Weighing the Benefits of Prepaid Debit Cards

It's important to understand the pros and cons when considering a prepaid debit card.

Budgeting After a Divorce

Budgeting After a Divorce

Divorce is the second most stressful time in a person's life. Here's some tips to get through it.

Home Mortgage Deduction

Home Mortgage Deduction

Use this calculator to assess the potential benefits of a home mortgage deduction.

 

Have A Question About This Topic?







Thank you! Oops!

Good Health is Good Business

Good employee health can be great for the company’s bottom line.

Test Your Life Insurance Knowledge

How much do you know about one of the most important tools you have to help protect your and your family’s financial future?

Key Money Moments: 4 Times You Should Talk to a Pro

Life happens fast, and your finances can take a backseat if you’re not careful. Is it time to check in with a financial professional? This infographic will help you examine your own financial situation and decide if it’s time to step up your financial game.

View all articles

Social Security Taxes

Estimate how much of your Social Security benefit may be considered taxable.

Should I Pay Off Debt or Invest?

This calculator will help determine whether you should invest funds or pay down debt.

Lifetime of Earnings

Estimate how much you have the potential to earn during your working years.

View all calculators

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

View all presentations

It Was the Best of Times, It Was the Worst of Times

All about how missing the best market days (or the worst!) might affect your portfolio.

Choosing a Mortgage

Selecting a mortgage isn't an easy process. Get a better understanding of how professionals make the right decisions.

Exit Strategies of the Rich and Famous

Estate conservation is too important to put off. Do you have a smart exit strategy?

View all videos