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This week on the Pete the Planner Show, Pete and Damian get into the show in record time!
No time to listen? Here’s a preview of what happened and when:
MAILBAG QUESTION #1: [2:07]
- “Hey Pete, honest question: given recent content around inflation and changing conventional knowledge about drawdown rates… My wife and I generally set aside $50,000 – $60,000 annually for retirement, including employer matches. We have 25-30 years until retirement and our savings is about $430,000. We max out one 401(k), we’re also funding two 529s and making weekly contributions into brokerage accounts. We have a very aggressive risk tolerance, but assume conservative returns for long-term planning. Despite all of this, most retirement calculators have us coming up short because they assume we’ll need 75%-80% of our current income in retirement. Our income is slightly variable based on annual bonus potential and whatnot. But shouldn’t we reduce the amount of annual retirement income we’ll need by what we’re currently saving? At the point of retirement, we’ll be drawing down our balance rather than actively contributing so it seems that it should be reflected in the assumed need…
- PETE: I major beef with retirement calculators. Do they assume people won’t reduce their expenses at all?
- DAMIAN: Most people don’t want to live on less in retirement. Hopefully your health will be in good condition, and you may end up spending more with the extra time on your hands.
- PETE: Most people accumulate priorities without shedding priorities
- DAMIAN: That can be an absolute retirement plan killer.
WILL YOU NEED THAT MUCH?: [13:50]
- Let’s look at the Ideal Budget and play a game. Do you think you will need more or less of the following expenses in retirement?:
- HOUSING (25%) of your income: Damian – Less. Pete – Less
- TRANSPORTATION (15%): Damian – Maybe a push. Pete – Less
- FOOD (12%): Damian – Less. Pete – Maybe about the same.
Review the rest of the Ideal Budget with the Dunns in when you listen to the full show!
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Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.