Skip to main content

Save Less for Retirement

When it comes to retirement, the general consensus is: save more, retire securely. Which is why the findings published in Research magazine are so surprising.

These findings postulate that retirees, particularly those in higher income brackets. May need to replace less pre-retirement income to see them through their later years.

Typically, financial planners suggest that the average individual plan to save the majority of their income (roughly 80{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439}) in order to maintain their standard of living and to sustain them during their nonworking years.

However, the research published in Research magazine theorizes that this rule may not reflect how a person’s income grows during his or her working years. Additionally, the tradition of setting aside 80{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of income doesn’t tend to reflect the fact that expenses change and frequently decrease during later years.

Let’s take a closer look:

Smaller Contributions to save less for retirement

During your retired years you will actually be contributing less to Social Security, Medicare/Medicaid and your retirement account.

You won’t need to set aside funds for it. Then, you won’t need to factor them into your savings plan.

Now, that doesn’t mean you won’t have other expense that pop up, particularly healthcare costs. However, if saving for retirement and setting up a sufficient emergency fund was a priority during your pre-retirement years, then you will not have to worry about it in your later years.

Instead, you’ll be focused on conserving the income you have.

Less Expenses

It stands to reason that, by your retired years, you should have settled most of your debts. This means that your mortgage should be paid off, your credit cards and student loans debt , and your children are most likely grown and are no longer financially dependent.

In terms of paying off debts and bills, your expenses will likely decrease during your retired years.

This is especially true for those in a higher income bracket, who may downsize significantly in their post-working years. 

These expenses decrease further if you consider the fact that downsizing in your retired years is normal. Most retirees move to smaller houses or to areas where they don’t have to commute. So, realistically, you could eliminate a mortgage and car payment in your retired years, depending on where you live.

Speaking of where to live, many retirees move to areas with low cost of living. For a list of some of the best places to retire, be sure to check out our article on Where to Retire!

Interest Rates

Anything you save in your retirement fund will accrue interest. According to, 5{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} is a realistic marker for planning purposes.

Now, while your account may accrue interest that does not mean you can skimp on your savings. It simply means that you should be taking these gains into account as a part of your overall savings plan.

Ultimately, Your Savings Should Reflect Your Needs

This is a no-brainer and may even help you save less for retirement. Unfortunately, for many individuals, the idea of this makes sense but is rarely practiced when it comes to setting aside for the future.

You may not need to stash away as much money as you once thought; however, you will need to carefully plan for how much you will need in your future.

Your first step in doing so is to speak to a trusted financial planner. Similar to calculating life insurance needs, you will need someone who is savvy when it comes to long-term planning, and someone who can look at your present financial situation and how it will impact your future. 

A financial adviser can help you look at all of your current expenses and can help you decide how to stash away the most amount of money possible. Additionally, a financial adviser can help you determine the trajectory of your current retirement plan and what options are available to help you get on the track – and stay on the track – toward future financial security.