It really is a very good idea to live below your means. I had a good teacher tell me that. Not only will you save more, but then when trouble comes it won’t be very hard to adjust, as you’ll already be used to living like that.

I’ve always thought it funny when you hear of the elderly having large sums of money, but they are too sick/fragile to do anything with it. As the above comment said, there is no reason to sacrifice every pleasure, but there certainly is a balance. You don’t want to live for the moment, but you also don’t want to be a stingy scrooge.

There are some expenses that are likely to be larger in retirement like health; at the same time some – clothing, car – are likely to be smaller. I heard a financial planner tell some woman planning for retirement how she’d need to allow for car payments becuase at an old age she’d want to change cars often??!! A home is likely to be paid off too. Also – would you want to live in the same house when you are old, no longer have kids, have no energy to take care of the house and your legs hurt when you climb stairs or would you want to move to a smaller condo? There are a number of things these calculators don’t consider.

Also, I live right now on less than 50% of my salary without even trying – I still take vacations in Europe/Caribbean. There is no reason to think I’d need any more than that in retirement yet many of them suggest higher replacement amount.

Thanks for the interesting post. One point that is frequently ignored in these calculations is “How much can you actually afford to save?”. There is no point in putting away a large sum for your retirement if this money is actually coming indirectly from borrowing. I think that this is probably happening far more than people realize.

Neil