Planning for how expenses change should be top of mind.
Provided by Daniel Kelley & Kevin Guarino – Our Friends at Clover Leaf Financial, LLC
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 $70,570 per year for households headed by pre-retirees, Americans age 55-64. That figure drops to $52,141 for households headed by people age 65 and older. For people age 75 and older, that number drops even further to $45,820.1
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 a study by 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? Do you need help identifying those expenses that are likely to rise or fall? Do you have a plan in place? Give us a call for a complimentary review.
1. Bureau of Labor Statistics, 2020
2. BlackRock.com, 2023. (Based on a 2017 landmark study that looked at retirement spending.)
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