Planning for Retirement

 

"What's more, with all due respect, I don't agree with the assumption that we need to maintain our preretirement income. Everything I've read says that less income is needed in retirement. You usually don't have a mortgage anymore. Nine times out of ten, you no longer have dependent children. Your house is fully furnished. If you've saved properly, then you've stopped having to buy insurance. Obviously, expenses are way down in retirement. So, why would you need as much money then as you did in your last years of work?"

Tom had raised two very valid points. I suspected that even Roy might have a tough time answering them satisfactorily.

"Let me look at your need-for-income point first. Then I'll address your isn't-this-all-a-bit-much question," Roy began, obviously pleased, not exasperated, by Tom's refusal to accept the wealthy barber's opinions as gospel.

"In most cases, several years before retirement, the mortgage has indeed been paid off, and the children have indeed moved out. So, for many, the last few years at work are characterized by good income levels and significantly reduced expenses. In all likelihood, disposable income is at its highest point ever. Upon retirement, it's no fun having to lower your standard of living because of a drop in your income. Psychologically, it's a difficult, if not traumatic, adjustment.

"If the decline in expenses happened to coincide per-fectly with the date of retirement, instead of occurring earlier, maybe there wouldn't be a major problem. But it seldom happens that way. Adjusting to a significant drop in your disposable income is not my idea of a good way to start retired life, especially since it's a myth that present-day