Retirement Might Not Cost As Much As You Think
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Home>Daily Capital>Retirement Planning>Retirement Might Not Cost As Much As You Think

Retirement Might Not Cost As Much As You Think

One of the reasons why the 401k By Age post receives so much attention is because so many people view the 401k chart as unobtainable. Even those who are well within the 401k range for their age don’t think the numbers are realistic. Odd. Read the comments to see for yourself.

It’s true that life gets in the way all the time. There are 65″ TVs and iPhone 6s to buy, vacations to take, fancy restaurants to try, FOMO fears to overcome, and mouths to feed. What’s the point of working if we don’t spend our money, right? Because one day, you will no longer want to work. And when that time comes, you better have a nice financial cushion or else you’ll be stuck and miserable.

I spoke to several 50+ year old colleagues and acquaintances about the topic of retirement the other day, and many of them felt uncomfortable with their savings progress. When I asked them why they didn’t save more, they couldn’t give a straight answer. One said, “I didn’t anticipate growing older so quickly,” Another said, “I thought that’s what pensions are for.” We began to laugh.

Retirement calculators and 401k charts seem to be creating some sort of anxiety. But it’s that anxiety that causes people to change their habits, otherwise we tend to go towards the path of least resistance. Saving and investing takes discipline. It’s much easier not keeping track of your finances and spending everything you earn to live in the now. Good thing our free financial management tool makes managing our finances so easy that there’s no more excuses.

If you are feeling anxious that you are way behind on the retirement savings front, I’ve got some very positive news for you. Retirement is most likely not going to cost as much as you think. Let me share a story.


In 2012 I decided to retire early from Corporate America because I had enough after 13 years. Working in finance was no longer fun, and we were public enemy number one even if we had nothing to do with mortgages. I lasted 8 years longer than I expected in an insanely stressful field and I just wanted to do something less stimulating for a while – like sleep.

The courage to leave came from aggressive savings the moment I got my first paycheck. I knew I wouldn’t be able to last for 30-40 years like my parents did, so I sacrificed my spending for more financial security later on.

At the age of 35, I gave everything up to live like a vagabond writer, traveling to new countries every few months with only a backpack. I figured if I could subsist on ramen noodles, water, and fruit as a young man, I could do it again years later. I tried very hard to live life as an early retiree for a couple years and here is what I discovered.

1) We always adapt to our income. Just like how a goldfish gets larger or smaller based on the size of his bowl, we most certainly adapt to our various levels of income. Think back to the time when you were a college student, or a 20-something year old with debt. It’s unlikely you were always unhappy because you were poor. Now think back to the time when you made a lot more money. It’s unlikely you were always happy because you were stressed! We always adapt to our income levels, otherwise, how else would have survived through the ups and downs?

2) Commuting costs go way down. When you don’t have to work, you don’t have to commute. Your gas and maintenance bills will go down drastically. You should get less parking tickets and traffic tickets as well. I cancelled my $80 a month bus pass and reduced fuel costs by another $100 a month. Given I never had to rush anywhere, I could afford to walk or bike further distances. You’ll find renewed adventure in taking your time going anywhere again. Monthly savings: $180

3) Clothing costs are reduced. Every day I wore simple clothes such as sweat pants, jeans, a t-shirt, and a fleece. I never had to do any dry cleaning or buy new formal clothes during my time off. There’s simply no need to impress anybody anymore. All you will want to do is feel comfortable. Go through your closet later tonight and look at all the clothes you don’t wear. I’m pretty sure most of us have too much stuff. Monthly savings: $100

4) Entertainment costs get slashed. If you don’t have to work 7am-6pm every day, there are a bunch of free things to do. You can play tennis or basketball at a public park with your friends. There are free museums. You can go to local street music fairs. The library is a great resource for reading magazines, surfing the internet, and checking out books. There are also plenty of discounts for food (early bird specials) if your time is flexible. Once you’re retired, you actually get to use the resources you’ve been paying for all these years. Monthly savings: $300

5) You’ll meet plenty of other people. One of the biggest fears retirees have is losing their sense of identity. After so many years of producing, making phone calls, and servicing clients, the drop-off can feel very lonely. Have no fear. No matter what time of the day I went out of the house, there would always be tons of people hanging around at coffee shops and walking the streets. A lot of people either didn’t have to work or have very flexible work hours. You’ll quickly get to know a lot of them and form friendships because many are searching for that similar type of support network. You can also be proactive in finding people online to hang out with through services like


Start saving more already!


The happiest countries in the world all hail from Europe. Every year, Norway or Sweden ranks in the top 5 despite their high tax rates because their governments provide free or subsidized health care, free education, and amazing public parks and entertainment. Although they might not be at the forefront of inventing the next great product, they are happy because they aren’t afraid of falling through the cracks.

It’s easy to see America become more like Europe over the years. We have an aging population with a less competitive income advantage who demand increased services. Eventually other countries like China and India will surpass us in terms of productivity and ingenuity. But by then, the US will have reaped the benefits of all our hard work so we can live more balanced lifestyles.

Without debt, life doesn’t cost much. If we are able to get $1,200 a month in Social Security and draw from our years of savings, surely life will be quite comfortable living in America. We’ve got a stable government and public services officers to help keep the peace. We’ve got the free sunshine and majestic waves of Hawaii to soak in if we ever decide to move.

Although my 401k by age chart has a guidance range of $650,000 to $2.5 million by age 60, don’t worry if you’re not there. The public parks and libraries alone could fill up every day of your retirement life. You can also consider retiring abroad where your dollar will go much farther. Just make sure to get out of debt before your main sources of income disappears.

Finally, if you start getting really bored in retirement (or run out of money), you’re not destined to be shut out from society. Personal Capital let me back in, surely another organization will let you back in as well!

Readers, any retired folks out there? Please share your thoughts on life in retirement and whether it costs more and less than you thought.

Photo credit: Darren Johnson Flickr Creative Commons



The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Sam Dogen is the author of the new personal finance book "Buy This, Not That: How To Spend Your Way To Wealth And Freedom." Sam has been using Personal Capital to keep track of his finances for 10 years. He is the founder of Financial Samurai, one of the largest independently-owned personal finance sites with over one million visitors a month.
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Building my emergency fund
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Budgeting better
Saving for a short-term goal, like a vacation or new car
Increasing my investment contributions
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