Articles like this get me going. I just can't help it. On today's MSN homepage there was a link to something about retirement not being so bad. And it led to this: Why your retirement won't be so bad. Are you kidding me?
The premise of the article is that most retirement calculators overestimate your needs for retirement because they don't into consideration some key things. As the author states, they ignore reality. I don't know what kind of reality the author lives in, but not one that I am familiar with. His argument is that people will need less in retirement because they would have paid off their homes, have finished educating and paying for their kids, and finished paying for their ailing parents. Really? As far as I know, many people in this country are using their home equity as ATM machines and have no intention of paying off their mortgages in full before they retired. And even though you may have finished paying for your kids college, they move our and eventually come back, with broken relationships, new enterpreneurial dreams, second career cravings, etc, all of which they are looking for some money. And their parents? Well, they are living longer and need even more financial aid.
Now the author, Scott Burns, does make a case that some spending will go down in retirement, I believe he is not living in reality in where costs and spending will go up. What does he expect you to do all day? Wait around for the mail for your financial statements? Most people I know who are planning for retirement have dreams of more traveling, more hobbies, more home projects. If anything, they might be spending more money in retirement than they do while working. And if you are blessed with a long life, your retirement could be very costly. Especially if you need any kind of healthcare requirements - which almost all of us will. Mr. Burns also points out that the cost of living will be cheaper with eventual widowhood because a single-person household will cost less than a single. Maybe that is true if you are glued to a TV screen and never leave the house, but if you go on any kind of trip, the single supplement is huge. Just ask any single person today.
So back to my point. Articles like this from the mainstream press are designed to capture your attention, but in my opinion, they are like the rags at the supermarket checkout counter. Empty, incorrect, and irresponsible. It would have been more accurate to report that spending habits will change, not decrease.