Business
Are you in for a big pay cut when you retire, or will you have enough income to maintain the same standard of living that you have now? A study by the Consumer Financial Protection Bureau found that it’s about half-and-half. Can we get by on less, or should we be looking at replacing our entire paycheck?From the Article:The Consumer Financial Protection Bureau (CFPB) found that 49% of those who retired between 1992-2014 were not able to maintain the same level of spending in the first five years of retirement.The study indicated that spending levels don’t drop because people have fewer expenses or their spending preferences change. Instead, CFPB found that spending typically declines from an inability to meet expenses.The CFPB study pointed out the importance of having a pension for retirement income. It found that 73% of those with pensions kept up spending levels in retirement versus 39% of retirees without a pension. The study also highlighted the importance of taking Social Security at the right time. Specifically, 65% of retirees who claimed benefits at or after their full retirement age were able to maintain the same spending level after retirement, compared to 55% who took it early.