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Originally Posted by Slava
The wealth transfer he refers to is the baby boomers passing their wealth to the next generation, which is considered to be the largest wealth transfer between generations in history. It brought up constantly at financial advisory meetings of one sort or another. For a few reasons I think that its largely bunk....but thats another story.
The biggest failing of people planning for retirement though is horrible planning. Most people have this idea that they are going to downsize, and spend less money than they currently live on - that figure is approximately 75% of their income. Mysteriously though they plan to reduce their spending to this point while having more free time (no longer working for 40 or more hours a week), and no schedules to hold them back from their likely poor spending habits! The reality is that a lot of people spend more than they are actually earning when they initially retire. They travel, they buy stuff for the grandkids and kids, they do things in terms of hobbies more than they were able to before. This comes to an average of about 135% of their pre-retirement income. In other words people are planning for a retirement where they'll have much less budgeted than what they will actually spend in their retirement!
(Saving to be able to spend 135% of your pre-retirement income would be a nightmare btw, but the numbers are what they are; and I'm looking at the first 10-15 years where most retirees are active and spending the most money)
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Statistics contradict what you say. In that
Money Sense article linked earlier it says
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According to Statistics Canada, median spending by a couple over 65 is about $40,000 a year, and average spending is about $51,000. But VanGorder says to enjoy the type of retirement he wants, you might spend as much as $60,000 a year.
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Hardly earth shattering numbers.