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Time and again I hear that a retired couple lives “comfortably.” I often wonder what that means. Of course it is quite relative not unlike defining living paycheck to paycheck.
My AI companion came up with this simple definition.
“Living comfortably means financial security to cover essentials without stress, and a lifestyle you enjoy. It’s not about excess, but having what you need and freedom to do what matters to you.”
That leaves the relative definition of “need.” Also, “lifestyle you enjoy” may mean rocking on the front poach or traveling the world.
I look at this definition and think that enough to “cover essentials” is living close to the edge. Living without financial stress is certainly desirable, but I think that goes beyond essentials to covering emergencies, a decline in come producing assets and other stuff we don’t like to think about.
In any case I’m pretty sure only the retired person can claim they live comfortably, but is it always providing the lifestyle they would like?
How do you define living comfortably in retirement?
Living comfortably means having the ability to do what you want, and not worrying about paying your bills, or unexpected things like repairs, replacing an automobile or a water heater, etc. It also means not worrying that somewhere down the road you will experience financial difficulties. Of course there are those who may feel living comfortably means they can travel the world staying in 5 star hotels and eating at 5 star restaurants.
I guess the remaining question is, how far does do what you want extend? For us it did include traveling the world, but not in luxury hotels.
This is a very interesting question, one that likely has as many answers as there are retirees. With so many answers possible, it might be worthwhile to think about the counter example, or what would constitute an uncomfortable retirement.
1) having insufficient income to pay your essential bills like food, housing, transportation
2) having to rely on others for financial support – like family or friends
3) having to live with friends or family
4) using credit cards to make ends meet
5) having to work longer than you want to, or your health allows
6) counting on public financial support, like property tax rebates, to get by
7) grey divorce
8) being forced into early retirement
I’ve seen all these in colleagues, friends, family, or TaxAide clients. There is a philosophical idea that evil is the absence of good. Maybe comfort is the absence of discomfort.
That’s gray rather than grey
Wiki disagrees: https://en.wikipedia.org/wiki/Grey_divorce
It was used in honor of the three lions making the final.
Don’t know which AI you used but that’s pretty good. I would say that living comfortably in retirement means the same as living comfortably while working, with a lot more leisure and a lot less stress. As I’ve said before, I have lived comfortably in retirement on much less than my final salary, plus I got in a lot of travel. My standard of living did not change – isn’t that the criteria you’re looking for?
It was Gemini
Living comfortably in retirement? Doing what you want to do when you want to do it. Freedom is priceless.
Good Lord I really want to hate AI, but I have to say it came up with a pretty good definition.
As for going beyond essentials and preparing for emergencies, the folks that don’t plan will still be comfortable….. Until their not.
I think the AI definition above is pretty good. Sure “cover essentials without stress” is subjective, but that doesn’t mean it isn’t true. It just means that one has to assess the credentials of who’s stating it. For me it doesn’t have the same creditability coming out of the mouth of a 20 year old that it would being stated by an older savvy HD reader. I think the articles on HD help get us educated to a point where we can reliably speak using terms like “enough” because we do have a pretty good idea of who we are and what we need to consider before we declare we have “enough”. Also, to me “cover essentials without stress” means having a margin of safety. So with that clarification, I think the AI definition above does a pretty good job describing how I’d define “living comfortably in retirement”.
Well said. Thank you
Here’s a question for RDQ: How much do questions like the one above — along with the relentless focus on replacing 100% of pre-retirement base salary — reflect objective worries about the financial state of America’s retirees, and how much do they reflect RDQ’s idiosyncratic and perhaps excessive concerns about financial security?
Not sure it’s my job to worry about America’s retirees.
However, as I did all my working life, I think it’s helpful to generate issues people might want to think about, to clarify frequently used terms and assumptions, to challenge conventional thinking at times.
Food for thought as it were, others can accept, reject or simply ignore. Frankly, I like to learn when I am challenged.
As far as financial security goes, I think we need concerns much closer to excessive.
We’re all products of our upbringing, and that includes me. You don’t think your concerns about financial security reflect your parents failure to prepare financially for retirement, which you’ve mentioned in a number of articles?
Certainly
and equally working with literally thousands of workers and retirees over the years listening to their plans or lack thereof, their flawed assumptions about retiree benefits discovered only a few months before they retired – like thinking their spouse would have free health benefits
during one three month period I processed 1300 employees who jumped at an early retirement program – and then I heard from the people who made a mistake and wanted their job back, even spouses asking to take their husband back because he had not discussed his plans.
and then the issues they faced in retirement and pleading for a pension COLA
and after that listening to widows who weren’t provided for.
Yes, my views have been shaped into being (overly) cautious and financially conservative. Not sure that is too harmful.
When Jeep and GM were culling the herd 15 or so years ago, tax clients would ask and then ignore my advice. To me it made no sense to give up a 110k job for a 70k buyout. Many ended up working for 10 or 15 bucks an hour when the pension and early SS benefit fell short of their expenses. (Many of the retirees were well under age 62, so the pension was grossed up to provide extra income until they reached age 62, than reduced when SS kicked in).
Seeing people make these mistakes surely influenced my thinking regarding saving and planning.
That’s what we did, gross up until age 62. Even without a special program I could have retired at 55 with an unreduced pension simply based on service.
But I was still paying college bills and could not have lived on the pension alone let alone be comfortable and I would have missed the highest earning years of my career.
Well that’s another point about the auto workers, their SS benefit was adversely affected by not working long enough to knock off the early low earning years.
Not to mention there is no COLA in those pensions.