In a recent Reuters article, Linda Stern explains that there is a big difference between an ideal retirement and the kind of retirement people end up with. She’s right about this. But she goes off the rails when she suggests that you should plan for a typical retirement.
Apparently, “Most people spend a lot in their first year or two of retirement ... But over time, retiree spending drops substantially.” It’s hardly surprising that people spend now and worry about the consequences later.
But when Stern advises that retirees plan to “start their retirements withdrawing 5 percent or more of assets in their first year of retirement” because retirees “don't inflate their spending on an annual basis to match the Consumer Price Index,” she goes off the rails.
I find this logic nuts. Other people plan poorly, overspend initially, and endure the painful reality that they’ve wasted a chunk of their savings and have to cut way back. So, I should set out to do the same thing?
Thanks, but no thanks. I’m going to try to avoid any painful cutbacks. I may not succeed, but I’m not going to throw in the towel right away.