60%, 80% or 100%...

[Justin Bilyj]

Post retirement planning, what amount of income do you think seniors need or use? I have seen the touted 80%, but now 60%? I also have heard brokers say that seniors continue to spend the same amount of money in post retirement as they did in preretirement.
Just wondering what your experience is.
Thank you,

 

[VolAgent]

Some will spend more. They have delayed vacations, bucket list trips, expensive toys, etc. till retirement. Or, health has caused retirement and higher health care expenses will more than offset any savings by retiring.

 

[Tahoe Ray]

I wouldn't go below 80 and Vol is right that sometimes (at least initially) it is more than 100. The only expense that is guaranteed to go away in retirement is saving for retirement.

Think about what you did last Saturday (golf, skiing, maybe a nice dinner out, whatever). Now imagine that every day is a Saturday...retirement can be expensive.

When you factor in that early in their retirement years people might spend more and then in later years have increased health care costs, they might be looking at 80-90% or more.

This, of course, assumes no decrease in standard of living.

 

[Justin Bilyj]

What inflation indices do you use to illustrate inflation? Senior, Avg., Real (we all know these figures are not the true figure)?
Thank you,

 

[Tahoe Ray]

What inflation indices do you use to illustrate inflation? Senior, Avg., Real (we all know these figures are not the true figure)?
Thank you,

Tough call as it is so hard to predict...CPI-E probably gives a pretty good representation for retirees though.

The numbers that are reported today are sometimes hard to believe:

Alternate Inflation Charts

 

[DHK]

Post retirement planning, what amount of income do you think seniors need or use? I have seen the touted 80%, but now 60%? I also have heard brokers say that seniors continue to spend the same amount of money in post retirement as they did in preretirement.
Just wondering what your experience is.
Thank you,

I wouldn't use any general rules of thumb for this marketplace. Those are for the masses and statistical articles. They're great for teaching agents and advisors... but poor to use for advisors/agents to relate to their clients.


I would simply ask each client how much income they 'need' and 'want'. Needs are the basics: food, clothing, mortgage, etc. 'Want' are a little more towards travel, etc.


Do a fact-find and determine their assets, social security income, pensions, etc. and then do your best to close the gap as you can. Give them choices. You can say "I can put your money in this bucket and guarantee you $x/month for the rest of your life, or I can put your money in this bucket where you have complete flexibility and control, but you may run out within x years. Or we can do a combination approach between the two. What would you prefer?"