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Falling for this Myth Means Running Out of Cash During Retirement
#1
You've read it countless times -- you'll spend less during retirement. You've nodded your head at this sage advice, imagining all those work lunches you'll be avoiding, the work clothes you won't be buying, the gas you'll be saving. You've got a whole retirement plan based on the fact you'll spend around 70% to 90% of your pre-retirement income once you've left the workforce.

There's just one problem: actual data shows the "fact" of reduced spending after retirement is nothing more than a myth. And, if you've fallen for it, you could end up paying for this mistake when you can least afford to.

https://www.fool.com/investing/2017/10/0...sh-du.aspx
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#2
I plan to quit hookers, coke, and fast cars once I retire. I am pretty sure my expenses will be much lower in a life of Bingo and fish frys!
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#3
(10-09-2017, 08:07 PM)tdogg Wrote: I plan to quit hookers, coke, and fast cars once I retire. I am pretty sure my expenses will be much lower in a life of Bingo and fish frys!

The coke maybe but the hookers NEVER!

I suppose my scenario is rather different to yours:

On the plus side:

I have a guaranteed state pension which is subsistence level
I will save money on parking because I won't be going to the city
As a pensioner I get free bus and ferry trips off peak times - so the car will avoid a lot of shorter journeys (if I'm disciplined)
Most of my medical is paid for except dental
I will avoid buying so much office type clothing
I will avoid a lot of bought lunches (we should have time to make more at home)
I will grow veggies (I'm making the bed frames now!)
I will have more time to shop carefully and buy bulk

The negative:

We will do some road trips so our gas consumption may well rise
Dental costs will inevitably rise as I age
We plan a couple of global trips to visit friends (2019 in the USA - make up the spare beds guys - you'll have visitors!!!)
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#4
The myth is slightly different than the one mentioned as far as I have seen.

The myth is that spending will automatically decrease in retirement. The problem is, it requires effort and self control to reduce spending. With the increase in free time that is associated with retirement, it takes even more self control than when you were employed.

I live in Canada, and sudden health issues are not a major destroyer of retired life (well the waiting lists sometimes are, but that is another story). Nope, people want to travel, and travel, and travel some more. In fact, up here the rate of growth of debt for seniors is larger than any other age group (http://business.financialpost.com/busine...population).

So as far as the "myth" is concerned, on average, expenses can and should decrease in retirement. But it requires effort.
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#5
(10-10-2017, 05:06 AM)andrew_o Wrote:
(10-09-2017, 08:07 PM)tdogg Wrote: I plan to quit hookers, coke, and fast cars once I retire. I am pretty sure my expenses will be much lower in a life of Bingo and fish frys!

The coke maybe but the hookers NEVER!

I suppose my scenario is rather different to yours:

On the plus side:

I have a guaranteed state pension which is subsistence level - socialist. Cry free market bullship all you want, but you are a gov. employee.
I will save money on parking because I won't be going to the city - Ok.
As a pensioner I get free bus and ferry trips off peak times - so the car will avoid a lot of shorter journeys (if I'm disciplined) That is just pennies.
Most of my medical is paid for except dental - No doubt from a government sponsored plan.
I will avoid buying so much office type clothing - Ok.
I will avoid a lot of bought lunches (we should have time to make more at home) - Cooking from home can be a big saver.
I will grow veggies (I'm making the bed frames now!) - Congrats! Let's share tips one fellow gardener to the next. One tip - the secret to getting the most out of your garden is learning about food preservation. There are others, but that is number one.
I will have more time to shop carefully and buy bulk - Eh...

The negative:

We will do some road trips so our gas consumption may well rise - Sounds like fun.
Dental costs will inevitably rise as I age - not so much. At some point, you can just start pulling teeth out if they cause you problems.
We plan a couple of global trips to visit friends (2019 in the USA - make up the spare beds guys - you'll have visitors!!!) - I wouldn't let you in my house, but would be more than happy to meet up at a restaurant for food and drinks.  if you happen to be in the midwest at all, I will even get the first round - that should help you save a little retirement money. If we are on the west coast we can seek out cbeatty.
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#6
(10-10-2017, 09:20 PM)tdogg Wrote:
(10-10-2017, 05:06 AM)andrew_o Wrote: If we are on the west coast we can seek out cbeatty.
Please do. I'll buy you both Dinner.
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#7
(10-10-2017, 09:20 PM)tdogg Wrote:
(10-10-2017, 05:06 AM)andrew_o Wrote:
(10-09-2017, 08:07 PM)tdogg Wrote: I plan to quit hookers, coke, and fast cars once I retire. I am pretty sure my expenses will be much lower in a life of Bingo and fish frys!

The coke maybe but the hookers NEVER!

I suppose my scenario is rather different to yours:

On the plus side:

I have a guaranteed state pension which is subsistence level - socialist. Cry free market bullship all you want, but you are a gov. employee. 

Sure! But I paid taxes here for decades so in effect I've already paid my dues. In fact I'm in the top 2% in NZ so I've paid for more than my share.

I will save money on parking because I won't be going to the city - Ok.

That's $300 per month

As a pensioner I get free bus and ferry trips off peak times - so the car will avoid a lot of shorter journeys (if I'm disciplined) That is just pennies.

It avoids running the car for short journeys which eats most gas. Because we have a ferry service out to various islands pensioners get free day trips to very nice places. Take a packed lunch and you get a marvellous deal!

Most of my medical is paid for except dental - No doubt from a government sponsored plan.

Once again, I've paid my dues. They owe me. Regardless of whether its socialist or not, the key thing is the efficiency of delivery and in NZ they're good at that. The USA has a few lessons to learn there.


I will avoid buying so much office type clothing - Ok.

I will avoid a lot of bought lunches (we should have time to make more at home) - Cooking from home can be a big saver.

All I need to do now is learn to cook... Sad

I will grow veggies (I'm making the bed frames now!) - Congrats! Let's share tips one fellow gardener to the next. One tip - the secret to getting the most out of your garden is learning about food preservation. There are others, but that is number one.

My garden is tiny by US standards but I have a sunny aspect and can grow year round. My main aim is to grow salads year round. The rest (root crops etc) are so cheap as to be not worth it

I will have more time to shop carefully and buy bulk - Eh...

I run through the supermarket at breakneck speed grabbing food. There are opportunities around if you know how and have time to take advantage of them

The negative:

We will do some road trips so our gas consumption may well rise - Sounds like fun.
Dental costs will inevitably rise as I age - not so much. At some point, you can just start pulling teeth out if they cause you problems.
We plan a couple of global trips to visit friends (2019 in the USA - make up the spare beds guys - you'll have visitors!!!) - I wouldn't let you in my house, but would be more than happy to meet up at a restaurant for food and drinks.  if you happen to be in the midwest at all, I will even get the first round - that should help you save a little retirement money. If we are on the west coast we can seek out cbeatty.

I'm house trained! I use toilet paper and everything! Big Grin
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#8
Speaking with the experience of a geezer who has been retired for years I can state that no amount of self discipline can prepare you for the wild card of major medical expenses. Even with good insurance, which my wife and I have, a few major surgeries or weeks long hospitalizations which my wife has needed can totally blow a budget.
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