The Montreal Gazette wrote an article this week about seniors carrying a “scary” debt burden into retirement. I’m always skeptical when I read statistics like these, because they can usually be interpreted in whatever manner the writer wants, but according to the article, seniors declaring bankruptcies have also increased, which is perhaps more indicative of demographics than Economics, but still interesting. The individual interviewed for the article speculated that, “Seniors are carrying more debt into retirement, they are trying to maintain a lifestyle they had pre-retirement but on post retirement income, and if income has dropped, they are increasing their debt to cover off their spending. It’s a very dangerous strategy.”
Being interested in personal finance, like the majority of people who read this blog and others like it, overspending retirement savings seems like one of those things you really don’t want to get into. If retirement savings dwindle, there is no backup source of money coming in – the plan may change from enjoying free time at the end of a career to trying to re-enter the workforce at a salary significantly below what you were used to making.
Whether you’re planning on retiring at 30 or 70, the pool of money accumulated to that point has to last until (kind of grim I know…) death. I know that I will probably obsess a little too much over my pool of money after retirement. That pool of money will, for me, represent freedom from having to work ever again.
The challenge when figuring out retirement savings at this point is how much money is necessary for my wife and I to survive in the 40 – 60 years that we won’t be working. In addition to how much money is needed, a balance needs to be made with how long we both feel like working.
My wife and I would rather live a less consumerist lifestyle and gain freedom to do the stuff we like to do….which are mostly low-cost in nature and we enjoy immensely. By the time we’re retired we will (hopefully) have achieved an understanding of “holes” in our budget and will hopefully be able to achieve the balance of having both enough money to retire and enough time to enjoy the extra hours that money will bring.
Do you worry about running out of money after you retire?