Kiplinger.com lists six myths about retirement. Here is one of them.
Myth #5: I’ll spend less (and pay less taxes)
Depending on your goals, you may be spending more in retirement than you thought you would, especially if you are travelling, visiting children and grandchildren and pursuing new hobbies and activities. Additionally, inflation can erode your purchasing power over time.
Another related misconception is that you’ll pay less in taxes once you’re retired. But that assumes you’ll have less income. If you end up with the same amount of income in retirement as you had when you were working, you may not be in a lower tax bracket. Also, you may qualify for fewer tax breaks such as mortgage and college savings deductions. Tax rates may also rise in the future.
What you pay for health insurance may increase dramatically especially if your former employer contributed toward your premiums while working. The premiums for Medicare and Medigap for me and my wife are ten times what I paid for employer coverage the day before I retired.
You should not begin retirement with the assumption that 60%, 70%, even 80% of pre-retirement income will be sufficient over 25-30 years of retirement.
Every dollar I spent the day I retired now takes $1.45 just because of inflation.
Don’t forget saving doesn’t (shouldn’t) stop at retirement. You need to maintain and sustain an emergency fund, especially if you are living by drawing down accumulated investments. You probably can’t afford to take an extra large lump sum from those assets and stay on track with your income plan.
QUINNSCOMMENTARY 
I retired in 2019. The biggest surprise to me has been inflation. We’re not hurting, but watching prices go up the past few years has been surprising and aggravating. I have a small fixed pension but did well with my company’s 401k.
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Covid. World wide inflation. But if not that it could have been something else. For me it was 2009 house value dropped by half. Underwater. Negative equity. But I didn’t move till twelve years later, and my house and IRA recovered nicely.
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The Fed is determined to inflate at a 2% annual rate as well as control unemployment. Trying to control an economy as large as ours means they are off target for years at a time and we are left to pick up the pieces.
That said, a 30 year retirement plan needs adjustment every so often. If you start retirement with more than you need, you are golden. If you don’t have those resources it will be tough to start and tougher down the road. Social Security does pretty good at keeping you up to speed but a fixed pension requires supplementary help. That’s where the retirement stash comes in. You pretty much have to take a good look every few years and see if you are still ok.
The wife and I have been fortunate to be able to save all the RMDs in side accounts that will cover several years of nursing home care if needed and our Roth accounts are still intact. We’ve always kept an emergency fund and when it builds up sufficiently, we dip into it for such things as car purchases and home renovations.
Every few years we take a look at total retirement accounts and non qualified accounts to see where we are. I remember losing money selling our last house because it hadn’t recovered from 2008. Our current house has earned that back and then some with the current run up.
I think Brother Quinn is right on being prepared for retirement by having enough to cover more than just basic living expenses when pushing the retirement button.
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“several years of nursing home care if needed…”
There’s the rub. We could handle that, barely. Not much more.
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Inflation at various rates is always with us. Retirement planning should assume at least 3% a year as a hedge against inflation
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If, like many people (much of my family), your only income is SS, then you’re covered for inflation. Poor, but covered. Except that inflation doesn’t affect everyone the same. Homeowners vs. renters, for instance.
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I retired in 2009. Back of the envelope figures say SS benefits have increased by just over 33 percent cumulatively. Does compounding those increases bring it to your (and mine) 45 percent?
My pension also has a COLA, but is limited to 2 percent a year. It helps. I believe there is a catch-up feature so if inflation is zero for one (or more) years, the next year may exceed 2 percent.
We are able to bank/invest at minimum, my wife’s SS, so when I pass, she can net the same income, and still have a nest egg.
Most of this was more luck than planning, but we do live on about 70 percent of income. Downsized house and car, more sedate lifestyle, etc.
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Never once sat with my wife to discuss numbers/%/anything as she is not terribly interested–we invested in a few good funds beginning in 1969 or so and never stopped adding money including this month–maxed out retirement money–IRA–SEP/IRA–and have non retirement account –with 2 Social Security payments–one indexed pension and 2 RMD’s we have no issues.
The key is time, patience, and discipline. We keep investing in those few solid funds in spite of brown underwear years and talk of the apocalypse.
All one needs to know is that since 1962: the S&P closed at 63–last year 4,770, thus (+ 76 X)——cash dividend of $2.15 -in ’62 —last year $70.30 (+33 X)—-CPI in ’62 ended at 30 and last year 307 or 10 times what it was in 1962.
No green eye shades–no re balancing–no nothing–as long as the process has not changed at the funds we use nothing changes. Spend 5-8 minutes daily viewing fund (s) % change with yahoo. At year-end add up total value.
Refinanced 30-year mortgage at 3.3% as I refuse to put money into the walls. House in no way viewed as in investment as it pays no dividends and I have a carrying cost (property tax). Cost us $47,500 in ’73 and worth maybe $1.4 million–invest that amount in the Index this time in 1973 and it will blow your socks off. But one needs to live somewhere. Our house was a place to raise the children–not an investment.
Lucky to have 2 kids–no issues–4 years of college and then out to full time well paying jobs with solid spouses and solid grandchildren.
Most important 7 words for the retiree: every year everything I buy costs more. Inflation is the enemy–rising dividends can well be the enemy slayer.
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