The Retirement Spending Lie Most People Believe

💲 NEED FINANCIAL ADVICE? 💲
1) Google "fee-only financial adviser" or visit www.NAPFA.org (largest association of fee-only financial advisers). NOT an affiliate link
2) The first question to ask any financial adviser is, "Are you a fiduciary to me 100% of the time". Get the answer in writing
3) Please note that some people call themselves "fee-based". This is NOT the same as fee-only. Fee-only advisers have committed to being fiduciary to you 100% of the time.
4) Personally, I would only hire an adviser who is a fiduciary to me 100% of the time. This is not a suggestion on what you should do. Just sharing my personal preference.

⚠️ Azul's "Scammer" Warning ➡ PLEASE READ! ⚠️
Be careful of scammers. In the comments section, I will NEVER ask you to contact me, offer any investment products, recommend a stock broker, or anything similar. Some scam bot commenters 'ask' for investment help, and later, other comment bots reply with "how great X idea/investment/person is" in the replies. These are scam threads. Do not fall for them.

🚨 Azul's VIDEOS ARE NOT FINANCIAL ADVICE (Disclaimer) 🚨

The decisions on how to invest, when to retire, and other financial planning topics are some of the most important financial decisions you will make in your life. I urge you to seek professional financial advice as you make this decision. Ideally, from a financial adviser, AND a CPA AND an attorney. Having the perspective of all three professions will help you make the right decision for you and your family.

This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and may NOT be suitable for all investors.

This information is NOT intended to, and should NOT, form a primary basis for any investment decision that you may make. Always consult your own legal, tax, and/or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.

Spoiler Alert: There are no "get rich" programs. Rather, just basic blocking & tackling and putting in time and care. Do your homework, choose wisely and (IMHO) work with experienced professionals who are fiduciary to you 100% of the time.

*175 RAW A{Hammad}NE The Retirement Spending Lies All Retirees Believe

[JoshuaMartins-srez]

I always thought I’d be spending way less in retirement, but honestly, my travel and hobbies are costing me more than I expected!

[jtixtlan]

I’m so encouraged!

For several years, I’ve wondered if what I’ve invested in my IRA will be enough. I often forgot to consider that once I’ve retired and have begun making withdrawals, the remainder will keep on growing. I have met my goals of having my mortgage paid, kids’ college tuitions and loans paid, $600K in IRAs, and $100K in a 4%+ savings account. I am now sticking it out through January so my full 2024 salary will replace one of my $0 at-home mom years in my social security calculation.

If the work culture isn’t miserable in Jan-March, I may wait until spring to continue earning while the whether is frigid, but I have given myself my own blessing to retire at the end of January, a few months before I turn 64.

Woot woot!

[Kin--]

I had initially planned to retire at 62, work part-time, and save money, but the impact of high prices on various goods and services has significantly disrupted my retirement plan. I'm worried about whether those who experienced the 2008 financial crisis had it easier than I currently am. The volatility of the stock market is a concern as my income has decreased, and I fear that I won't be able to contribute as much as before, potentially jeopardizing my retirement savings.

[sippy]

I spent WAY more than anticipated much earlier than expected. But we are still ok.

[Paul-GrnHil]

I think the 4 % rule serves one purpose. Your essential expenses should not exceed 4% of assets, or the inverse is you need 25 times your essential living expenses in retirement savings to retire comfortably. With your essential expenses covered you can spend extra in the go-go years knowing you can cut back to a smaller amount if the market performance is bad. I’m currently spending more than 5% with travel and other discretionary spending knowing I could cut back to 3% if I had to. In the 2.5 years of retirement, my portfolio is larger than when I retired.

[enr]

Bill Bengin changed his ;4% rule to 4.7%. His prior recommendation was based on 2 asset classes. His latter recommendation is based on 7 asset classes. Stay informed!

[daveduffy]

I’m 60 now and am trying to get all my travel done while I am still working and healthy. After I retire at 70, I’ll see what my options are then. All I know now is that I am moving to a low cost state. It is way too expensive here in NJ.

[EvelynRose-oh]

I retired at age 53, so I am in my early 60s. Many of them resisted me because they couldn't understand the idea of not working if it wasn't necessary. I considered the phases of my life. I worked very hard to achieve what I have now, but in my last years, I owe it to myself to "stop and smell the roses." In my instance, I departed the nation after retiring and currently reside in Latin America. It made it possible for me to appreciate my new surroundings while escaping all the bad things that were going on in America. Nobody that I know of regrets retiring has yet to come to me.

[raymond-iv]

People are facing a tough retirement. and it's even harder for workers to save due to low-paying jobs, inflation, and high rents. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire in.

[Old_Sailor]

Already survived a widowmaker, so I certainly don't expect to live to 90.

Thankfully, I haven't touched my IRAs or annuity and I've been retired 5 years (retired at 59.5).

[karenjensen]

I need a 95% certainty. No way I will ever have to go back and take a lame PT job at Lowes like many many of my neighbors have had to, nope. I will work 4 more years to 65.😅

[floccinaucinihilipilifications]

Excellent presentation. Thank you for your reflections … gives me more courage.

[ddavidson]

I retired at age 61, have been retired for 10 years, I've been spending about 6%-7% of my savings each year and I still have the same balance in my retirement account as when I started. The "4% rule" is way too conservative, you are robbing yourself of the retirement you could have had. (Recently I said to my financial adviser "I feel like I should be spending more".) Unless you decided to retire in 1929 on the day before the crash that began the Great Depression, using the 4% rule you'll more than likely end up passing away with more sitting in the bank than you started with. The 4% rule isn't exactly a lie but it's based on pretty much the worst case scenario you could imagine.

[JJJ.]

@Azul, I disagree. But the real answer depends on the person's discretionary spending as a percentage of total spending.
My mom as an example, her discretionary spending was a small portion of her overall spending.
Over the years her expenses have gone up. There was no slow down in spending.
And now well into her 80s, her expenses are significantly higher than they were 20 years ago.

[josepinedo]

For me #1 lie is that your expenses will go lower.
Expenses will go higher according you age is up and loose cababilities to do things by yourself

[nicolasbenson]

I am currently in my 50s and This is no time to taper retirement savings. I want to max out my retirement contributions and I also have another $200k in a savings account that i want to invest in a non-retirement account. Where should I invest it now?

[mutley]

Hoping to retire sooner rather than later and enjoy my best healthy years while I can. As such, I’m looking at spending more in the early years, leading to leaner expenses as time goes on.

[peten]

My grandmother lived on the 4% rule for 30 years and her money went up(good for me) like crazy but the 70s were rough. As long as you can cut back, maybe work(tons of remote work now) if needed you should be fine.

[glennet]

When you retire your earning capacity vanishes after a few years and so you don’t have any way to catch up and you won’t enjoy your retirement if you don’t have peace of mind.

You can study averages and typical retirees and monte carlo simulations all you like but you only get one shot at it.

The 4% rule is useful for deciding if you can afford to retire but I doubt whether even tne originator would recommend slavishly sticking to it for the next twenty or thirty years.

[jasonw]

So 5% withdrawal rate sounds better? (its closer to Bengans updated paper in 2021 which said 4.8% is the updated amount)