All about the challenges of Midlife Finance

Saving For Retirement: More… or Less?

There’s a new trend out there, arguing against the long-held advice put out by practically every financial guru, from Money magazine to Suze Orman:

    You don’t really need as much for retirement as they’ve said all these years. 

For one thing, retirees spend less than their working counterparts — a lot less. According to Forbes magazine, using expenditures from a typical 65-year-old’s household expenses as a mean, spending falls off 19% by age 75, 34% by age 85, and 52% by age 98, based on the findings of Sudipto Banerjee, a  research associate at the Employee Benefit Research Institute.

On the negative side, medical expenses go up considerably as you age. But — your savings in other areas more than make up for the shortfall, according to Banerjee. True, it’s a lot more fun to go on a cruise than to the doctor’s office. But your health may not permit you to take that cruise. Which brings up another point:

You should be actively saving and planning NOW for the trip you’ve always dreamed of.

For decades, my parents talked about an Alaskan cruise with their children and grandchildren. By the time we all actually went on it, Dad was seriously ill with the cancer that killed him — and miserable. He spent much of his time sleeping in his room. Mom felt duty-bound to stay with him, so couldn’t go to many of the events she’d looked forward to. Brother and his family liked getting up at the crack of dawn and doing all the day trips. We, on the other hand, tended to poke around in the towns on our own, and enjoyed staying up late. (Don’t even ask about the teenagers’ differences.)

The whole thing was just short of a fiasco — and an expensive one, at that. If we’d gone a decade earlier, when the grand-kids were young and Dad had his strength, it would have turned out quite differently.

Even though the experts are saying you don’t need a million or so dollars to retire, after all, retirement is still looming. And you don’t feel comfortable about it.

What are things you can do to help?


Pay off your debt — now. Go on an austerity plan, if you have to, to get a jump start. No new purchases, except food and gas. No movie tickets or dinners out. Even a week or two of this, and you’ll have extra cash to put toward your debts.

Little steps count, too. Can you go without cable, or cut down your phone minutes? Can you turn down the thermostat, or turn up the air conditioner? Eating less meat — or cheaper cuts — helps. So does drinking water instead of soda or smoothies. Do this regularly, and it adds up.

If you don’t get this part of your life under control now, while you still have a regular paycheck, it won’t get any easier. Social Security isn’t that generous.

Plan on working into retirement — even if only part-time. Many financial experts are now advocating this as a stopgap for those who are unprepared; one study suggests that 66% of those retiring by age 66 aren’t financially ready to do so. If they waited until age 70, on the other hand, nearly 89% would be prepared.


And finally, take care of your health now. Exercise and diet are going to have a major effect on whether you can actually keep working, let alone enjoy your retirement years. (According to the article just cited, 50% of retirees who left work early in 2012 cited health problems.) Extra weight wears your joints out faster, and contributes to conditions like heart trouble and diabetes. Eat healthier and exercise more, and you contribute to a good retirement just as much as you would financially.

Saving for retirement: more... or less

It’s worth it.

3 Responses to Saving For Retirement: More… or Less?

  1. Good suggestions all… In keeping with point #2, we suggest developing a high cashflow yielding business, skill, or asset as you head into retirement in order to extend your working life and/or reduce the strain on your retirement savings.

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