How much will you spend in retirement?

The Wall Street Journal just published a good article about retirement income.

I tend to be conservative in my planning, so I assume 100% pre-retirement spending, and spending 3.33% of savings per year, but the article highlights the more conventional view of 75% to 85% pre-retirement income and 5% per year spending.

The choice is really up to each individual, but I prefer a bigger rather than a smaller margin of safety.

If you were told you had a 1 in 20 of getting into a major car accident today that would cause debilitating injuries, you probably would elect not to drive.  But, when people are told they have a 5% chance of running out of money in retirement, they don’t seem to grasp that 1 in 20 and 5% are the same odds.

Depending on the kindness of strangers–or worse, family members!–in your 80’s or 90’s sounds about as enticing as a debilitating car accident, to me.

The issue isn’t so much what numbers you plan for retirement spending and saving, but that you think about it.  The article referred to above gives a great set of ideas to consider in your retirement planning.

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.

How much will you spend in retirement?

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