I was playing golf recently and asked my playing partner about his retirement plans. He answered, “How do I know? There are so many variables.” He’s right. It’s simple question to ask, yet increasingly difficult to answer.

Perhaps, you are nearing retirement age and are beginning to ask yourself, “Can I retire yet?” While this question is simple to ask, it is one of the most difficult to answer because it relies on many variables, including the spending and saving choices you make leading up to and during your retirement.

There are many “rules of thumb” and guidelines regarding retirement; however, like all rules of thumb, they aren’t written in stone. Thus, they may not be accurate for your particular financial situation, making them inadequate in defining the logistics of your retirement.

David Blanchett, CFA, CFP®, the head of retirement research at Morningstar Inc., published an important working paper in November 2013 entitled “Estimating the True Cost of Retirement.” One of the noteworthy conclusions from the study is that retirees spend more in their early years of retirement than in their later years.

Rather than spending at a steady rate for the entirety of retirement, the study validates what we have been advising for years – most retirees reduce their spending over time. You’re much more likely to travel, pursue expensive hobbies, go out to eat, spend money on your grandkids, and the like in your mid 60s than you are in your mid 80s.

Blanchett found that in inflation-adjusted dollars, retirees spend an average of 20% less in retirement by the age of 85 than they did at age 65.

We at Gainplan believe it is our responsibility to analyze YOUR situation, not just give you a rule of thumb to live by. Given your situation, you may be able to:
•    Retire sooner than you initially anticipated,
•    Retire from your day job to go pursue an encore career that either requires fewer hours or that is in a new field you’ve always wanted to explore,
•    Need less money to fully fund your retirement, or
•    Keep your retirement date and target savings the same but enjoy a higher standard of living in retirement 

If you haven’t planned your retirement yet, let us help you get started. As my dad has told me on numerous occasions, “If you wait for all the lights to turn green, you’ll never leave the house.”

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Gainplan LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Gainplan LLC or performance returns of any Gainplan LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Gainplan LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.