Retiring doesn’t automatically mean you will spend less money.
People often underestimate how much their ideal retirement will cost, according to author Dan Ariely, a professor of behavioral economics at Duke University.
Being tied to an office all day can make it harder to spend money, said Ariely. In retirement, the new hobbies and activities you pick up to fill your leisure time will eat into your fixed income.
The best-selling author conducted a study that found most people expected they would need to replace about 75% of their salary to fund their retirement.
Researchers then calculated how much the respondents would need based on their planned lifestyle. The numbers were way off, Ariely said.
Watch this video to learn what percentage the same people actually would need and how to start saving more for retirement.
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