Retirement Read Time: 2 min

How Retirement Spending Changes With Time

New retirees sometimes worry that they are spending too much, too soon. Should they scale back? Are they at risk of outliving their money? This concern may be legitimate. Some households "live it up" and spend more than they anticipate as retirement starts to unfold. In 10 or 20 years, though, they may not spend nearly as much.

By The Numbers

The initial stage of retirement can be expensive. The Bureau of Labor Statistics figures show average spending of $60,076 per year for households headed by pre-retirees, Americans age 55-64. That figure drops to $45,221 for households headed by people age 65 and older.1

When retirees are well into their 70s, spending often decreases. The Government Accountability Office data shows that people age 75-79 spend 41% less on average than people in their peak spending years (which usually occur in the late 40s).

Spending Pattern

Some suggest that retirement spending is best depicted by a U-shaped graph -- It rises, then falls, then increases quickly due to medical expenses.

But in a 2017 study, the investment firm BlackRock found that retiree spending declined very slightly over time. Also, medical expenses only spiked for a small percentage of retirees in the last two years of their lives.2

What's the best course for you? Your spending pattern will depend on your personal choices as you enter retirement. A carefully designed strategy can help you be prepared and enjoy your retirement years.

1. Bureau of Labor Statistics, 2019
2. CBSnews December 26, 2017

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

Video: The Independence of Financial and Emotional

Video: The Independence of Financial and Emotional

Greater financial and emotional confidence brings greater independence. Isn’t that what it’s all about?

How to Jump-Start Your Financial Strategy for Retirement

How to Jump-Start Your Financial Strategy for Retirement

Get on track to creating the retirement you want. Here are seven financial strategies to take now to help you.

Infographic: The ABCs of Financial Literacy

Infographic: The ABCs of Financial Literacy

So you think you know what it means to be financially literate? See if your knowledge stands up against this infographic.

 

Have A Question About This Topic?







Thank you! Oops!

Business Boosters: Tips for Building a Team

Here are a few tips on how to recruit, hire and onboard employees who fit your culture and share your passion to succeed.

From Seeking Yield to Seeking Profits

How low can you go? We’re not talking about the limbo. We’re referring to sovereign bond rates.

Retirement Planning With Your Special Needs Child in Mind

Having a special needs child adds another layer of complexity to retirement planning. A special needs trust may help.

View all articles

Capital Gains Tax Estimator

Use this calculator to estimate your capital gains tax.

Disability Income

This calculator estimates your chances of becoming disabled and your potential need for disability insurance.

Can I Refinance My Mortgage?

This calculator can help determine whether it makes sense to refinance your mortgage.

View all calculators

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

Long-Term-Care Protection Strategies

The chances of needing long-term care, its cost, and strategies for covering that cost.

Your Cash Flow Statement

A presentation about managing money: using it, saving it, and even getting credit.

View all presentations

Estate Management 101

A will may be only one of the documents you need—and one factor to consider—when it comes to managing your estate.

Questions to Consider When Buying a Vacation Home

Doing your research is key before buying a vacation home.

When the Unexpected Becomes Reality

Disability happens to more people, more often than you may think, and it lasts longer, too.

View all videos