Watching My Parents' Retirement Spending Made Me Rethink My Own Early Retirement Number

A Reddit poster is rethinking his retirement spending plans after watching how his parents used their money in retirement.

He said his parents are 72, have been retired for a decade, and claimed their Social Security benefits at 62. His mother has a pension, and while they don’t have a ton of money saved, he thinks they will still end up with $1 million left after passing away because they simply don’t spend much.

He believes that far too many people end up assuming they’ll need more money than they do in retirement and that they extend their working lives needlessly as a result. Based on his parents’ spending, he thinks that if he (and others) want to retire early, that can happen sooner — and with a smaller nest egg — than many believe is possible. 

However, not everyone agrees with the poster, and a lot of people are pointing out some issues they believe he is missing. 

How much money do you really need to retire?

Some Redditors said the poster is right, with one commentator indicating that studies show people overestimate what they’ll need to retire comfortably. Others said their own parents really didn’t need much money because they don’t do much in retirement, or that they had personally managed to successfully retire for less than they anticipated. 

However, there were plenty of contrary opinions as well. Some people warned of the possibility of long-term care costs, which could quickly blow out any retiree’s budget. Others said medical care was expensive, or that not all retirees wanted to live on a shoestring budget, and that some would prefer to live a more lavish life.  And, one person pointed out that while it wasn’t great to overestimate how much you need to retire, it is far worse to underestimate the amount and end up broke. 

All of these points are valid ones, and ultimately, once you make sure you have a plan for long-term care and medical costs and can cover the basic necessities, then it is up to you how much you need to live comfortably. Some people can retire in a low-cost-of-living area with $40K a year in annual income and be happy, especially if they are debt-free, while others need $200K to live the life they want. 

You’ll also have to think about the tradeoffs of how many extra years you’d have to work to live that lavish lifestyle. If you need to stay on the job for an extra decade to save enough to have $200K in annual retirement income, for example, is it worth trading that time for extra money later?

A financial advisor can help you decide how much you need to retire

Since everyone’s retirement target is determined based on their own spending goals, as well as their overall financial situation, like their debt levels and insurance coverage, the best thing to do is to talk to a financial advisor when making your plans.

An advisor can help you assess the big picture, determine what you’ll need to be comfortable without financial worries, and help you to create a strategy to get there on your desired timeline. This professional advice can make all the difference in ensuring you can retire when you want, while living the lifestyle you’ve been dreaming of.