Bill Bernstein wrote: Thu Aug 28, 2025 3:52 pm
The authors seem surprisingly impervious to the criticism that there has never been any conventional wisdom that claimed it was a reasonable goal to somehow aim to cut 30% of pre-retirement spending upon retiring.Please take another look at items 1-9 in the above post. What percent decrease in retirement spending do you think this list implies?
An eyeball estimate will do.
Gosh. Do you really not understand the issue being raised here? Or are you intentionally deflecting because you don’t have a good answer?
I (and others) have said your 30% less spending “conventional wisdom” claim is just flat wrong. We’ve never heard it! And to that you say… “Look at BobK’s list?”
Well, he came up with a very good list, but how does that support your claim? Is our very own BobK the elusive source of the folklore?
There may very well be people convinced they can slash 30% of their spending in retirement. (Incidentally, I don’t think BobK is one of them, so you seem to be mischaracterizing his constructive comments, too.) Lots of people claim Social Security at 62 also, but I sure hope you’d agree that shouldn’t be construed as conventional wisdom.
Here’s the question:
What led you to conclude that planning to spend only 70% of pre-retirement spending in retirement is recommended so often and is so widely accepted as to be considered conventional wisdom?
My contention is that slashing spending by 20% to 30% in retirement is a fringe notion that cannot possibly be considered common advice, a rule of thumb or “conventional wisdom.”
Why do I think so? Well, I was an avid consumer of all manner of retirement readiness metrics and advice for many years before I retired. Because I was saving anywhere from 25% to 40% of my income while planning retirement, I knew the income replacement guidance wasn’t directly applicable to me, but I always read every article I found with great interest to see if there was any angle I hadn’t yet considered.
[Also, check out the handy AI follow-up questions below!]
I can honestly say that I don’t ever recall reading any retirement advice anywhere that recommended replacing any specific level of pre-retirement spending, let alone replacing it down to the level of only 70%. All the advice I’ve ever read along the lines of reduced needs during retirement has been in the form of replacing a percentage of gross income, not spending. The numbers have varied widely, with somewhere between 75% and 85% probably being the most common range, in my anecdotal experience and to the best of my recollection. Have I just been lucky? Or maybe I’m just reading the right sources? I doubt it.
All the advice I’ve read has used the simplest top-down approach possible: Take your gross income, subtract any retirement savings, subtract payroll taxes, account for marginally less income tax on marginally lower income (from different sources), and yes, maybe count on some discretionary spending reduction — exactly like the guidance from T. Rowe Price. (By the way, just eliminating the retirement saving and accounting for lower taxes covers Items 2-6 in BobK’s handy list.)
In T. Rowe Price’s guidance, they assume an 8% savings rate and a 5% spending reduction to get down to 75% of pre-retirement income. Presumably, though I haven’t read the real-world sources Perplexity* conveniently provided, getting down to replacing only 70% of pre-retirement income requires an assumed spending reduction of 10%.
You want to criticize those assumptions? Fine! Have at it! You’ve got the data to challenge how sound that advice really is. But the general rule of thumb as crafted by T. Rowe Price — and as I would say is the more accurate depiction of the “conventional wisdom” — is certainly not ridiculous. Maybe it’s not as good as it should be. But to go out of your way to sensationalize the story by mischaracterizing the most common advice and grossly exaggerating any budget tightening it calls for, if that’s what you’ve done, just cheapens your otherwise excellent work. And it certainly takes attention away from what I think your core message really is: that even counting on spending only 5% or 10% less in retirement might not be realistic — or particularly pleasant.
[Besides, isn’t there enough of that kind of nonsense going on in general these days? Maybe that’s what’s got me so sensitive to it… ]
If you’ve got the receipts, as they say, I will gladly admit I’m wrong, that a completely irresponsible recommendation has become widespread while I wasn’t looking, and that I’ve been embarrassingly off-base in my criticism of the article.
So…
Can you tell us where you found all this preponderance of advice to slash spending by 30% upon retiring?
(Or is that the real fairytale?)
* Just as a sidebar comment, I am absolutely astonished at the quality of the AI generated content. As I was typing my prior post on Friday, in real time, and was wondering what T. Rowe Price had actually recommended, it occurred to me to simply ask Perplexity — my first really substantive query, aside from some shopping questions. I went to the site on a new tab and typed in a single query; there was no experimentation to get it to say what I wanted. The response it generated on the very first try is actually quite impressive! Yes, AI hallucinates. Yes, caution is advised. But one of AI’s truly awesome abilities is to take a large volume of information and condense it to an amazingly concise, well-organized and accurate summary. AI makes it all look like child’s play. Every assertion in Perplexity’s reply seems accurate, and every important aspect of the guidance that I had hoped to see was covered deftly — all in just 8 flawlessly organized and plainly written sentences!
Oh heck, just because it’s so easy these days… I just typed in two follow-up questions:
https://www.perplexity.ai/search/what-i … kHgUF7zfVQ
Excerpts of AI generated content, full responses in the link above:
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what is the conventional wisdom on recommended replacement of pre-retirement income or spending in retirement?
The conventional wisdom is to replace about 70–80% of pre-retirement income in retirement, not spending, although experts note individual needs may vary.[1][2][3][4][5][6][7]
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In conclusion, the 70–80% pre-retirement income replacement rule is mainstream advice, with the actual percentage dependent on personal circumstances, expected expenses, and financial goals.[6][7][1][5][2][3][4]
what is the conventional wisdom on recommended replacement of pre-retirement spending in retirement?
There is no widely accepted conventional wisdom for a recommended replacement percentage of pre-retirement spending in retirement—most mainstream guidelines are based on pre-retirement income, not spending.[11][12][13]
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In summary, the conventional wisdom focuses on replacing a percentage of pre-retirement income, not spending, because income is more consistent and predictable as a benchmark for most people.
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