Life after retirement is no different than before.
You still have bills, some regular and known, some a surprise.
You still need medical care and insurance to pay for it.
You still have taxes to pay, probably less.
You still need a place to live, likely a car as well.
You have family spending – gifts, grandchildren, activities
Unplanned and unfortunate stuff still happens.
You should keep saving in an emergency fund
You still spend time doing what you like and what you don’t, just more of it?
What is the big deal about retirement lifestyle planning, just let it happen?
But where will the money come from?
Accumulating a generous nest egg and a steady income stream is where efforts should be focused – from the first day on a persons first job. My financial position at age 80 may create envy for some, but where I am today took over sixty years to reach.
The income stream you create along with Social Security should equal your base pay/salary while employed. For most people that is not as hard as it may appear.
If you do that, everything else will fall into place.
You should always have two buckets of investments, qualified (401k, IRAs, etc.) and non-qualified after-tax brokerage account type investments. This gives you flexibility in spending.
Social Security will get most people about 30% to 40% income replace, quite a bit more for a couple combined.
You create your income stream in different ways and combination of ways from different sources.
- Social Security
- A pension for the lucky 15% of private sector workers who still have them – nearly all government workers have one.
- Immediate annuity purchased with after tax dollars – minimizes stock market risk, assures steady income and perhaps survivor income
- Income from (bond mutual fund) interest and corporate dividends – from after-tax investments. If you start early and reinvest during working years this will build up quickly
- Lastly by withdrawing from accumulated retirement savings – never more that the RMD, if applicable, and then reinvest what is not needed.
Don’t try and fit a retirement budget into an amount equal to 80%, 70% or whatever someone says of your pre-retirement income.
Make it your goal to entirely replace your working base income (not OT or bonuses, etc.) and everything falls into place – assuming you are not greatly increasing your lifestyle in retirement or that you lived above your means while working. If you lived on that income before retirement, why not after?
And don’t count on expenses/spending to decline in retirement – plus inflation of course.
QUINNSCOMMENTARY 
Excellent clarification of retirement financial reality. The conventional wisdom states your retirement spending is less than your spending while working. My retirement spending is higher based on medical expenses, travel, and hobbies. I have prepared adequately but it would have been helpful to know the truth about retirement rather than the conventional wisdom nonsense.
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Inflation marches on and if you retire at your then base salary, after 15 years or so, the old base salary starts to look puny. That’s where social security comes in and any growth of investments.
I have about concluded, after 17 years of retirement, that it all depends on where your working income ranks in comparison. My wife and I enjoyed a gross income that was well above the median for our State and we lived well within our means. Hence we had savings and investments. At time of retirement, we didn’t need 100% of our working income to live. We fit nicely on the 70-80% range. Not a year has gone by that we haven’t added to our savings.
I don’t believe the folks who have lower incomes than we had could accrue as much or have as much surplus. Retirement may be leaner for them.
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“Social Security will get most people about 30% to 40% income replace, quite a bit more for a couple combined.”
Aye, there’s the rub. “Two can live as cheaply as one.”
My wife’s Social Security, at about $2,000 a month, is the smaller of the two, so I understand that’s how much the survivor will lose. Plus going into a higher tax bracket sooner. I hope I outlive my wife, because I don’t think she understands that, really. We have discussed it.
Fortunately, we are now able to save and invest that much, or more, monthly, so the loss shouldn’t affect her/me much.
I have seen survivors devastated by that cut.
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One advantage to retirement is you no longer have to worry about being fired or laid off. Or… 2009 was a unique year because California (and other states and cities), due to the great recession, furloughed most employees two days per month. That’s a ten percent reduction in take home pay, which most people are not prepared for.
It’s partly why I retired that year. I also turned 62, and was diagnosed with kidney cancer. My pension and SS were within a few hundred dollars of my salary.
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