David Blanchett

It does.

I mean, you need about 25-ish percent less, right, when you retire.

Because what's really a really neat thing here is, right, like Social Security retirement benefits.

I know that there's like a hot mess with the trust fund.

Let's ignore that for now.

Right.

Like they are indexed by the full CPI.

right?

And so what happens here is like your savings, if we just assume you get your raises with social security, then the role of your portfolio changes dramatically, right?

The portfolio now has to maintain a constant nominal amount of income potentially versus one that increases by inflation.

And that can make it where you're going to have a much lower level of savings when you first retire.

So to your point, you can retire earlier, you can spend more.

And the key here is like,

The rule is you will spend less.

The exception is you will spend more.

So I just think that like people like this is a very common phenomenon that is not often incorporated in financial plans.

I mean, I still even do write papers where I assume it increases by inflation because everyone expects that.

Right.

But I think the problem is, is that just not an economic reality.

I think where you often get some pushback is that, you know, like advisors have said to me, well, I know that, but I like to be conservative for things like health care expenses later in retirement.