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