Once your kids are out of college, if you live within your means your expenses are as smoothed out as they’re gunna get.

At three years from retirement, I earn about $20,000 more than the median income in my city. Because I don’t carry a tab on the credit cards — that is, I never charge more than I have in my checking account — I live very frugally and I STILL spend every penny that comes in, with the exception of about $250 that goes into emergency savings. I have no mortgage. Seven percent of my gross pay goes into a 403b, matched by my employer.

If I retired today (which I surely would like to do), my Social Security would be a little over $800 a month. That is a little less than 1/6 of my current gross pay. If I wait until I’m 66 1/2 (horrors!), my SS benefit will be a munificent $1300 a month, less than 1/3 of my present salary. ALL THE REST OF MY LIVING EXPENSES will have to come from savings!

To earn the amount I now spend on ordinary living expenses (no travel, no eating out, no car payments, no house payments, no expensive clothes, no days at the spa, no elaborate hobbies, and when the dog dies I quit financing the vet’s Jaguar) without drawing down principal, I would need almost $800,000 in savings, assuming an 8% return on investments (the amount you really should figure is 4%). SS would reduce that figure by $10,000 or $15,000, an almost negligible amount in the large scheme of things.

The only way I can see to “smooth out” expenses would be to sell my home, which is not exactly a McMansion and is not in the best neighborhood in town, and move someplace cheaper. That means moving to Sun City (ech!), into a condo (I loath apartment living), or to a part of town that is unsafe for an elderly single woman.

If you’re a young person, start saving now and don’t stop!

One of the lines says “You can save too much might be full of crap” so you know what I think of all this!!!

If a doctor told us Americans weren’t getting enough fatty foods he’d be laughed at. If an economics professor says Americans are saving too much he’s quoted in the media. Too bad he doesn’t have a license he can lose – it’s just irresponsible. I’ve heard of this guy before and I give him credit for making an outrageous claim and profiting off of it. How he sleeps at night, I don’t know.

I’m also sure there aren’t many of those people.

Kotilkoff uses the exaggeration of “scrimping to splurge when you’re 80″, when in reality a 60 year old retiree today might have 30 years ahead of them. What good is it to “smooth out” your consumption based on a 75 or 80 year actuarial table if you really live to be 90. Or get a debilitating illness and find you undersaved?

And he doesn’t seem to notice than retirees can be in pretty good physical shape too, so they aren’t exactly limited in what they can do. Unless your goal is climbing El Capitan and running ultra-marathons, I would say that you probably aren’t going to be disappointed in the options you “put off” until retirement.

Finally, as the “Counterpoint” mentions, uncertainties about future circumstances are plentiful. It’s risky to factor Medicare or Social Security into your planning. It’s at least as risky to assume anything about inflation or taxes. Our current 3% inflation could move back into double digits like in the 70′s.
“Tax free” or “tax advantaged” investments are only that way at the whim of Congress.

With so many possible expenses and so many ways for your investments to drop in value and buying power, I think it is foolish to advocate saving less for basically anyone. Better by far to put off that cruise until retirement and have $1million in your estate than to “live for today” and wind up broke for the last 10 years of your life.

With very few companies currently offering pension plans, providing affordable healthcare, and the unknown status of Social Security and Medicaid, will the people who have very little saved for retirement in 30 years be the same as those who can currently get by in retirement with little or no personal savings?

I think his point of view is correct for a certain (select) market, and is a great headline grabber, but it doesn’t apply to Americans as a whole.