Save Less For Retirement?
Nichols suggests an alternative strategy. He says that people should plan to save so that spending will be about the same before and after retirement. For a single person earning a medium-level income and trying to retire at 45, he or she should only have to save around 28% of his/her income. While some cuts in social security benefits are almost certain and should be planned for, current workers should not save excessively to the point that their consumption will have to rise the day they retire.
See Study Suggests Some Are Saving Too Much For Retirement, ElderLawAnswers, Mar. 2, 2012.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
The typical thought is that people should be trying to replace 80% of their preretirement gross income by the time they retire. Austin Nichols, a senior research assistant for the Urban Institute disagrees with this guidance. He conducted a study entitled, “Do Financial Planners Advise Us to Save Too Much For Retirement?”. The study pointed out that the traditional rule is problematic because it requires that people save a high percentage of their income for years before retirement.
Nichols suggests an alternative strategy. He says that people should plan to save so that spending will be about the same before and after retirement. For a single person earning a medium-level income and trying to retire at 45, he or she should only have to save around 28% of his/her income. While some cuts in social security benefits are almost certain and should be planned for, current workers should not save excessively to the point that their consumption will have to rise the day they retire.
See Study Suggests Some Are Saving Too Much For Retirement, ElderLawAnswers, Mar. 2, 2012.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.