If you’ve read about retirement planning at all, you’ve probably read an article discussing why low initial spending rates from savings are prudent, due to the facts that we don’t know how long we’ll live and we don’t know what investment returns we’ll get.
A point I’ve been trying to hammer home in my writing over the last year is that there’s a third reason why a low initial spending rate can be a good idea: spending in retirement isn’t entirely within our control, and a low baseline level of spending gives us more “wiggle room.”
T Rowe Price recently published a study that looks at the degree of spending fluctuation within households throughout retirement, as well as the sources of that spending fluctuation. (One point that will surprise many people: fluctuations in housing costs, rather than healthcare, are the primary source of spending variability.)
Planning for Spending Volatility in Retirement from Sudipto Banerjee
Other Recommended Reading
How I Failed the Bogleheads from Paul Merriman
I Found My Wealth-Building Tribe from Michelle Singletary
A Financial Conference Worth Writing About from John Stoj
Don’t Just Look at the Results from Ben Carlson
Criticisms of Medicare Advantage Marketing Continue from Kimberly Blanton
Many Couples Do Not Coordinate 401(k) Matches from Kimberly Blanton
Thanks for reading!
What is the Best Age to Claim Social Security?
Read the answers to this question and several other Social Security questions in my latest book:
Disclaimer:Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Michael Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Michael Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Michael Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. The information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.
You may unsubscribe at any time by clicking the link at the bottom of this email (or by removing this RSS feed from your feed reader if you have subscribed via a feed reader).