There are zillions of articles on retirement saving, but one point that is always overlooked is the high cost of living as an elder.
I’ve worked with clients dealing with aging issues for over 30 years. I developed a rule of thumb that goes like this. In retirement the decade of the 60’s is about a new lifestyle of freedom. The decade of the 70’s is about fun engaging activities like travel and golf. The decade of the 80’s is when life gets scary.
Sure many retirees are still socking money away in savings in their 70’s. But, simply put life gets very, very expensive for folks in their 80’s. While the root cause is medical issues, medical bills are not a big impact on savings. Medicare and other insurance covers those. The expense is the cost of daily living. Many retirees in their 80’s can no longer maintain a single residence and so they move into senior apartments. These apartments offer many benefits including security, worry free maintenance, meals and other daily services. But this often doubles the cost of living. In addition folks in their 80’s more often need help with all activities of life including personal hygiene, paying bills, managing healthcare including insurance and so on. For some elders chronic medical conditions can require “assisted living” and for a couple the monthly rent may rocket to over $10,000 per month!
So, how much should you save for retirement? I say make a personal asset inventory. And here consider your “financial” assets and your “human” assets. For example elders with a big supportive family will need less in savings than a childless elder. When the elder with the big family needs help it will come from family members. A couple sharing living space with family will not have to pay over $10,000 per month. But the childless elder will have to pay “market rate” for ALL services.
So, there it is. If you have a big supportive family you will not need hundreds of thousands of dollars to live out your retirement. If you don’t have such a family, then save every dollar you can. Aging gets scary expensive.