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Investing for a Lifetime: Managing Wealth for the "New Normal" by Richard C. Marston

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CHAPTER 18 Retirement: Putting Together a Plan

A major goal of savings is to provide for a comfortable retirement, one where retirees can maintain the standard of living that they enjoyed during their working years. Retirees don’t necessarily need the same income as in their working years since they no longer have to save for retirement. But most retirees would like to keep spending as much as in the past. In his book The Prosperous Retirement (1998), Michael Stein emphasized that if retirees don’t have enough resources to come close to their past standard of living, they find a way to live within their means. That is most likely true of most people just by necessity. But surely retirees would like to continue to live the way they have in the past.

What are the key ingredients necessary to maintain this standard of living? In earlier chapters, we emphasized that drawing resources from past savings was crucial for those who do not have the luxury of a defined benefit pension. And many of those who do have defined benefit pensions need to supplement them by drawing on savings. But in addition to past savings, retirees also have the Social Security system guaranteeing them payments for the rest of our lives. Social Security is a key element of any retirement plan for most Americans. It is only if you have substantial wealth that Social Security payments can be almost ignored. So before we put together a financial plan for retirement, it’s important to investigate the key features ...

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