By Angelo Orlando
RECENTLY, I WAS on line at my neighborhood deli when a front-page, above-the-fold headline in Newark's Star-Ledger nearly made me choke on my Coke: "The Lifestyles of the Retired and Destitute: Save More, Spend Less Now or That Could Be You, Study Warns."
The accompanying story detailed how middle-class Americans who are now entering retirement will have to cut their standard of living by 24 percent or risk outliving their financial assets, according to a new study by Ernst & Young. That report reaches even gloomier conclusions about workers seven years away from retirement, who can expect to reduce their standard of living by 37 percent.
The accompanying story detailed how middle-class Americans who are now entering retirement will have to cut their standard of living by 24 percent or risk outliving their financial assets, according to a new study by Ernst & Young. That report reaches even gloomier conclusions about workers seven years away from retirement, who can expect to reduce their standard of living by 37 percent.
Now, I don't mean to pick on The Star-Ledger, or The Washington Post, where the story originally ran, both of which typically do a fine job of reporting on issues related to seniors. But this story is a classic example of how the retirement planning industry gins up unnecessary anxiety among precisely the people it is supposed to serve and soothe. It turns out that U.S. households headed by persons between the ages of 55 and 64 spent an average of $44,037 on everything from utilities to doctor visits to jewelry in 2002, the last year for which data is available from the federal Consumer Expenditure Survey. Households headed by people aged 65 to 74 spent $32,003, or 27 percent less. Which means that as Americans transition into retirement, they are already chopping their expenses by a proportion that's within the range that many financial advisers so ominously predict will be required in the future.
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