Except at the most abstract, we have hardly ever discussed retirement income at Time Goes By. One reason is that the amount each person lives on varies so widely that it's hard to find common ground or consensus. Another is that in the years since the financial crash, many retirees and near-retirees have been forced to change their expectations and/or living standards.
Many of us lost a large percentage of our life savings in the market crash. Others who expected to work for a few more years have run in to the twin difficulties of layoffs and long-term unemployment coupled with age discrimination. And some, who intended to cash out the equity in their homes and downsize, have instead found themselves stuck with underwater mortgages.
These past few years have not been an easy time to figure out how to retire.
Daily, my email inbox fills up with pitches from PR people urging me to write stories about a wide variety products and services. I generally ignore them, particularly the many from financial services “experts” each of whom has a secret system (usually in a book they are flogging) to make you rich in your retirement.
In a short glance before hitting the Delete button, I've recently noticed that they have something in common: almost all claim that to maintain the standard of living you are accustomed to, you will need 80 to 90 percent of pre-retirement income.
I think that would be nice to have, but I cannot imagine that many people – especially the non-wealthy – come anywhere near that amount. Or, more importantly, that such a high percentage is necessary.
Obviously, low income workers would need nearly 100 percent of pre-retirement income (I doubt many achieve that). I'm also betting that few middle-income retirees have anything like 80-90 percent of their pre-retirement earnings.
In my case, I live on about 24 percent of the last salary I earned before retiring. Although I can't take extravagant (or much of any) vacations, I get by relatively easily. Most of what makes that possible is not having a mortgage on my home and owning my car and I know how lucky I am about that. Like many people, however, any unexpected disaster would be – well, a financial disaster.
So I'm wondering today how you, dear readers who are retired or approaching that milestone, are doing? Do you agree that 80-90 percent of your pre-retirement income is needed? How much is enough for you? What, if anything, have you given up or expect to give up in retirement? How has the financial crisis and great recession affected your retirement or plans for it?
(If you'd rather discuss this anonymously, do feel free to not use your real or usual name in the comments.)
At The Elder Storytelling Place today, Johna Ferguson: A Few Small Changes