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Friday, July 24, 2015

The Retirement We Imagine, the Retirement We Live: Examining the potential differences between assumption and reality

Financially, how might retirement differ from your expectations?  As you approach or enter retirement, you may find that your spending and your exit from your career don’t quite match your expectations as few retirees find their financial futures playing out as precisely as they assumed.

Realistically, few retirees actually outlive their money.  The vast majority of retirees are wise about their savings and income: they don’t spend recklessly and if they need to live on less, at a certain point, they live on less. Health crises can and do impoverish retirees and leave them dependent on Medicaid, but that tends to occur toward the very end of retirement rather than the start.

The common guideline for new retirees is that you will need to retire on 70 to 80% of your end salary.  According to some analysts, you may not need to withdraw that much for long.  In the initial phase of retirement, you will probably want to travel and explore new pursuits and hobbies – all the things you have been putting off.  So in the first few years away from work, you may spend as much as you did before you retired.  After that, you might spend less.  In the big picture, households run by those 75 and older typically spend about half as much per year as households headed by people in their late forties.

In short, the retirement you live may be slightly different than the retirement you have imagined.  Fortunately, retirement planning and retirement income strategies may be revised in response.

Posted by: David Shober at 9:52 AM
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This material is intended for historical purposes and may be outdated. Its contents should not be relied upon as current information. For more up-to-date information regarding these topics, contact your financial professional.

All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Securities offered through Triad Advisors, member FINRA/SIPC. Advisory Services offered through ACI Partners, LLC. ACI Partners, LLC is not affiliated with Triad Advisors.