The Retirement Spending Myth: Why the 80% Rule Gets It Wrong

Most retirement plans assume your spending will stay flat, or that you will need about 80 percent of your pre-retirement income.

But retirement does not actually work that way.

In this episode, Tyler Emrick, CFP®, CFA®, explains what the research shows about how retirement spending changes over time and why relying on outdated rules like the 80 percent rule can lead to over-saving and under-living or under-planning altogether.

Drawing on research from David Blanchett’s Retirement Spending Smile, Morningstar data, and EBRI studies, Tyler covers:

• Why retirement spending is not a straight line
• How spending often declines in mid-retirement and rises again later
• The Go Go, Slow Go, and No Go phases of retirement
• How fear of running out of money causes many retirees to under-spend
• A practical way to estimate your real retirement spending needs

 

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