Boomers in their 50s expect to spend $578,000 over the course of their retirement on “activities” (above and beyond normal living expenses), according to a new survey from Sun Life Financial Inc. (U.S.), Wellesley, Mass. Those in their 60s expect to spend $611,000, and 70-somethings put the number at $662,000. (Read our story on this here )

Those numbers have the hint of spending spree about them. Advisors should point that out to boomer clients and use the discussion as a way to bring those clients back to Earth–and into the realm of realistic retirement planning.

The last number, about 70-year-old expectations, is least troublesome. After all, the survey was limited to people who have at least $250,000 in invested assets and who work with investment professionals on their investment decisions. Seventy-year-olds fitting that criteria are likely to a) have already experienced spending on “activities” in retirement and b) have the means and ability to project out their likely spending for their remaining years.

But the younger boomers are another story. They are in their 50s, a decade or so away from their retirement years. Many are still paying for college educations of children, paying off the mortgage, helping their ailing parents, juggling divorces and later stepfamily households, and struggling to stay afloat in today’s rough economic waters. Those with at least $250,000 in invested assets are certainly not paupers. But if that’s all they have now, along with their mortgage and other debts and expenses, they will be hard pressed to spend nearly $600,000 on “activities” once retired (unless, of course, they get a big inheritance or win a big lottery.)

Boomers who are in their 60s are certainly in a better position to judge their future spending. Hopefully they have paid off the mortgage and the college educations, weddings, and other major middle-age expenses. Hopefully, they will have settled down to managing money wisely, with an eye to their retirement future. Still, a review of how the 60-year-olds in the survey expect to spend their “activity” money raises more than a few doubts.

Here is what this age group–people with at least $250,000 in invested assets and who are working with an investment advisor, remember?–said they expect to spend in retirement:

o Domestic Travel $60,000
o International Travel $62,000
o Hobbies $15,000
o Charitable Donations $84,000
o Luxury Item (i.e. car) $59,000
o Home Improvements $69,000
o Second Home $245,000
o New Business $17,000

Total Expected Spending: $611,000

Now, to the problem: The allocations for hobbies and new business seem reasonable enough, but spending $245,000 on a second home? Really? Maybe $245,000 on a downsized principal residence in a retirement villa is reasonable. But it’s hard to imagine a large number of new retirees investing in second homes at the very time when they are stopping working and adjusting to living on a retirement income from existing assets.

Among the new retirees I know, the tendency is to downsize from the big house, maybe purchase an RV or some other vacation solution (time share, etc.), and set sites on an “enjoyable lifestyle” comprised of travel, hobbies, social groups, and sometimes part-time work. Some of that is reflected in the above list of expected expenses, but most people focus on doing a few of those things, not all, and certainly not a second home (unless exceptionally well set).

Currently, several of newly retired people whom I know do own two homes. But this is only because they bought the ‘downsizer’ before selling the big house, which they are now unable to sell due to the subprime mortgage mess. This is the kind of reality those numbers are not reflecting. (Note: This may be, in part, because the survey was conducted in April and May of 2007–i.e., before the subprime mess had fully rattled the U.S. economy.)

That’s the heart of the matter: many new retirees, despite their comfortable circumstances at time of retirement, quickly find that they really don’t have as much money for “activities” as they thought they would. Either the big house doesn’t sell, or sells for less than expected, or they encounter unexpected expenses or inflated costs that weren’t factored into the planning. Some find that $250,000 in investable assets doesn’t get them very far. (Some planners are telling me that $1 million in investable assets could be problematic too, “depending…”)

A finding from another study (of 60-74 year olds by Thrivent Financial for Lutherans, Minneapolis) puts the issue in perspective. The researchers in that study found that 56% of fully retired people said they had guessed wrong about how much they would spend each month in retirement. Specifically, 29% said they have been spending more than expected, while–surprisingly–27% have been spending less. (See our summary on this study here).

Clearly, the guestimates about future spending and expenses need to be taken with a grain of salt. Maybe 2 grains.

In a statement about the Sun Life results, David Byrnes, executive vice president and director of sales at the company, surmised that “the old rule of thumb that suggests retirees will need 80% of their pre-retirement income no longer holds true for current and future generations.”

Certainly if the predictions from the Sun Life study prove out, Byrnes will be correct.

But even if the projections don’t pan out, he will be correct. Many advisors tell me that many new retirees need close to 100% of what they earned previously–and many “need” to work at a part-time job to make it happen–just to keep on an even keel. Forget the second home and the international travel, etc. They are talking about having a comfortable retirement, in one home, period.

The Sun Life study tapped into a very fertile issue in the retirement income zone–financial expectations that people have about retirement. It sampled people who are working with “investment professionals” on “investment decisions.” Now, someone with training and experience in retirement income decisions needs to inject some reality into those expectations. This should be someone who knows the ropes, who knows the client, and who knows how to set up a realistic income plan. That someone would be a professional income planning advisor.