34 • MARTIN H. RUBY
As I mentioned, my dad was a small business owner, managing a regional chain of children’s clothing stores. He made a solidly middle-class living and worked hard to do it every day. When he retired, he and my mom really cut back. They’d buy generic-brand sodas instead of Coke. They didn’t travel much, and while they oc- casionally ate out, it was mostly meeting friends for senior dis- counts at Denny’s or coffee at McDonald’s. Like many retirees in their generation, they were thrifty and did more with less. In that way, they were able to lower their tax liability in retirement, be- cause they used less income in retirement. But that’s not the way today’s baby boomers think. My wife and I are a perfect example. When we retire, we plan to travel extensively. My wife loves castles and wants a return visit to Scotland. We both bike and en- joy bicycle trips to Europe — which we’ll do as long as we can. In retirement, we also plan to spend more time dining out and trying new experiences. We recently bought a new house in a trendy part of Louisville; it’s within walking distance of a variety of shops, res- taurants, and the local nightlife. In fact, my daughters joke we’re going to have more fun in retirement than we did in college. Most people like me don’t want to cut back in retirement. We don’t want to live more thrifty lives, counting every dollar with no breathing room. We want to maintain our pre-retirement lifestyle, and to do that we’ll need to maintain our pre-retirement income level. This is part of why I believe most Americans are not going to be in a significantly lower tax bracket once they retire. To preserve our lifestyles, we’ll have to preserve our incomes. But this is only one aspect of determining if tax-deferred saving or tax-free saving is right for you. The tax bracket I’m in is half the story; the other half is how much of my income is subject to that bracket.
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