Retirement Income Redesigned: Master Plans for Distribution: An Adviser's Guide for Funding Boomers' Best Years

Chapter 5. Psychological Impediments to Retirement-Income Planning

mathew greenwald

Many people, especially the affluent, start to look forward to the rewards of retirement as they reach their 50s and 60s. A relatively small proportion of affluent people want to work as long as possible. Those who plan to work well into old age do not have to save as much for retirement because the number of years they'll rely solely on their savings and investments for support will be relatively few, even if they live to a very old age. But the overwhelming majority of affluent people who want to retire by their mid-60s, with generally plenty of life expectancy left, will, in most cases, place quite a strain on their retirement savings. Their accumulations will often have to last—and be subject to inflation—for a long time.

I've conducted a great number of extensive interviews with affluent retirees and preretirees. The retirement most of them seek is very expensive. They want to maintain or even enhance the comfortable lifestyle they enjoyed before retirement. Enhancements include extensive travel, second homes, gifts to children, and expensive interests and hobbies. One retired person put it this way, "When I was working, I could not spend that much money; I was trapped in my office all day. Now that I'm retired, I have plenty of time to spend money." Of course, most affluent people want to take no risk of ending their lives in deprivation. And they want to avoid going into a nursing home if they ...