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It’s Not Worth Saving Too Much for Your Retirement – William Schantz Explains Why

It’s Not Worth Saving Too Much for Your Retirement - William Schantz Explains Why

Although it’s common for most people not to be able to save up enough funds for their retirement, the opposite is also true. Many people save up too much for their retirement, which is not always a good thing because it reduces the quality of their lives during their working years.

William Schantz explains why it’s not worth saving too much for your retirement.

William Schantz Points Out That People Overestimate Their Replacement Rates

Many experts state that the suitable replacement rate is 80% of what you were earning before retirement. This amount is said to sufficiently maintain your lifestyle requirements post-retirement. However, new research indicates that this amount is too large. It also shows that retirees can survive on much less, depending on the standard of living they prioritize. The factors affecting replacement rates are varying income levels and life expectancy.

William Schantz points out that depending on the retiree and their particular circumstances, the replacement rate range is between 54% and 87%. So, people who prioritize trying to save up at least 80% of their income might be fairly happy with only 55%. That extra effort to save up 25% more creates unnecessary stress during their working life, resulting in a reduced quality of life.

Improper Housing Cost Forecasts – William Schantz Explains Why

The major expenses in retirement are due to housing costs. Depending on where you live, you will need to manage your finances efficiently since expensive houses have high mortgage rates. Many retirees will have to downsize to cut costs since moving into an assisted living facility is more expensive. William Schantz explains that if you’ve already paid off your mortgage before you retire, that is the best-case scenario. However, housing costs can vary from 30.7% to 35.9% of yearly income, according to reliable statistics.

Saving the Proper Amount for Retirement: William Schantz’s Insight

Depending on your age and when you plan to retire, you will opt for different investment strategies for retirement. For example, you should save 10%-15% of your annual income if you have a full decade before retirement. However, everyone’s needs are different, so it’s useful to do detailed planning to know exactly how much you’ll need to save depending on how many years of working life you have left.

One way to determine how much you’ll need is to decide that you’ll try and maintain the same standard of living in retirement as when you’re working. You will find that your expenses are much less in retirement because you’re no longer putting money towards savings, paying less in taxes, and have reduced costs from things like fuel consumption for work commutes.

Summing Up

Saving up for retirement is nuanced and depends on people’s particular circumstances. Prioritizing an unrealistic, magic number for your retirement savings can detract from your quality of life during working years, which is something to avoid. For most people, retirement expenses are much lesser than working years, and William Schantz encourages people to think carefully about how much money they’ll need.