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Question:


Do I need to save money during retirement?
-LydiaVihyn


Answer:


That sounds like a trick question. If you’re retired, then you’re living off savings, almost by definition. If you save money while retired, then what is the source of it, other than your existing savings? Saving in retirement would just mean spending less and living more frugally. As to whether you should do that, as long as you can live comfortably and enjoy life on a more restrictive budget, then why not? That will leave you in a more secure position for unforeseen developments, and it could allow you to leave more to your heirs. Reducing spending could be essential, on the other hand, not merely desirable, if you burn through so much cash that your total retirement fund, after factoring in investment returns, is declining by more than 4 percent or 5 percent a year. That would mean that you’re running the risk of outliving your money. To avoid that, you probably should save more or spend less, however you want to phrase it.

-Conrad de Aenlle



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