Weekend Reading: You Probably Need Less Money Than You Think for Retirement
This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
The perception of wealth and its impact on your financial behavior is complex. Many assume that reaching a certain income level will solve their problems, but as they earn and save more, they start comparing themselves to wealthier individuals instead of their past financial status. This leads to lifestyle inflation, where spending increases to match a perceived status.
READ THE ARTICLEKeeping up with the Joneses: Some retirees with significant wealth don't even feel rich. This phenomenon is exemplified in a Bloomberg survey that reveals millionaires often worry about money. Lifestyle creep makes it hard to feel wealthy, as there will always be someone richer to compare yourself to. Quotes from survey respondents illustrate this: Despite making more money, people feel less satisfied because their spending habits and preferences change over time. As a result, achieving a certain financial milestone doesn't guarantee happiness.
Frugality syndrome: Further, research indicates that those with more secure retirements tend to spend less relative to their wealth. This paradox lies in the fact that while some are unprepared for retirement due to low income or lack of planning, others who are financially ready still struggle to enjoy their wealth due to constant money worries.
You may need less to retire than you thought. Have you ran the numbers? How much life are you missing out on due to incorrect assumptions?