Newsweek story on 4-phases of retirement spending?

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at ease
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Newsweek story on 4-phases of retirement spending?

Post by at ease » Tue May 04, 2010 9:48 am

......i just saw an article at MSNBC in the business-area by Newsweek saying a study by the Society of Actuaries shows 4 phases of retirement spending are common...early (the most expensive with travel and extra doings)...mid- where spending drops off...late-spending lowers even more and....end life- where medical often increase spending significantly....

...the story was interesting, it mentioned how we often plan on level spending (ie 4% +inf) as our target..but, their study shows past trends didn't work like that....

....for you who are in those phases....did you find this drop off in spending to be the case????

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Can't_wait_to_Retire
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Post by Can't_wait_to_Retire » Wed May 05, 2010 9:03 am


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Can't_wait_to_Retire
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Post by Can't_wait_to_Retire » Wed May 05, 2010 9:06 am

sheesh - triple post..sorry [I cleaned things up for you. - Mel]
Last edited by Can't_wait_to_Retire on Wed May 05, 2010 12:17 pm, edited 1 time in total.

dbr
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Re: Newsweek story on 4-phases of retirement spending?

Post by dbr » Wed May 05, 2010 9:32 am

at ease wrote:......i just saw an article at MSNBC in the business-area by Newsweek saying a study by the Society of Actuaries shows 4 phases of retirement spending are common...early (the most expensive with travel and extra doings)...mid- where spending drops off...late-spending lowers even more and....end life- where medical often increase spending significantly....

...the story was interesting, it mentioned how we often plan on level spending (ie 4% +inf) as our target..but, their study shows past trends didn't work like that....

....for you who are in those phases....did you find this drop off in spending to be the case????
I have found that over the last years of employment and the first years of retirement that spending has been pretty much exactly what I expected it to be based on an actual analysis of cost and obligations and their sources. The actual data is fairly noisy due to all the special, but well known, circumstances applying in different years. Obviously an attempt to naively take a percentage of income would have been totally inaccurate.

The actual data for "baseline expenditures" is that over the last eight years personal expenditures have declined an average of 2%/year with large increases in leisure time activities and declines in housing related expenses, transportation expenses, and medical expenses. In short, the onset of retirement resulted in decreases in expenses relative to working years even with increases of "typical" early retiree activities.

YMMV

ianferrel
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Post by ianferrel » Wed May 05, 2010 8:08 pm

I'd want to know how much of this effect is due to people spending less because they failed to budget properly and overspent during early years?

It does make sense that newly retired 60-somethings are much more likely to travel and have active (expensive) lifestyles, while 90-somethings won't, and that there's a steady trend.

But if (as we've seen recently) the average American has very little in retirement savings, it should also not be surprising that they spend through it rather quickly and are forced to live on reduced spending in later years. But that's not an argument for planning to spend more during the early years; it's the opposite.

Sidney
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Re: Newsweek story on 4-phases of retirement spending?

Post by Sidney » Wed May 05, 2010 8:12 pm

at ease wrote:......i just saw an article at MSNBC in the business-area by Newsweek saying a study by the Society of Actuaries shows 4 phases of retirement spending are common...early (the most expensive with travel and extra doings)...mid- where spending drops off...late-spending lowers even more and....end life- where medical often increase spending significantly....

...the story was interesting, it mentioned how we often plan on level spending (ie 4% +inf) as our target..but, their study shows past trends didn't work like that....

....for you who are in those phases....did you find this drop off in spending to be the case????
They left out "after life" when your surviving spouse starts to really ramp up the spending again. :wink:
I always wanted to be a procrastinator.

MWCA
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Re: Newsweek story on 4-phases of retirement spending?

Post by MWCA » Wed May 05, 2010 8:21 pm

Sidney wrote:
at ease wrote:......i just saw an article at MSNBC in the business-area by Newsweek saying a study by the Society of Actuaries shows 4 phases of retirement spending are common...early (the most expensive with travel and extra doings)...mid- where spending drops off...late-spending lowers even more and....end life- where medical often increase spending significantly....

...the story was interesting, it mentioned how we often plan on level spending (ie 4% +inf) as our target..but, their study shows past trends didn't work like that....

....for you who are in those phases....did you find this drop off in spending to be the case????
They left out "after life" when your surviving spouse starts to really ramp up the spending again. :wink:
When you are dead there is not much to care about ;)
We are all worms. But I believe that I am a glow-worm.

ndchamp
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Re: Newsweek story on 4-phases of retirement spending?

Post by ndchamp » Wed May 05, 2010 8:22 pm

Sidney wrote: They left out "after life" when your surviving spouse starts to really ramp up the spending again. :wink:
Shouldn't ramp up that much.
The new boy friend will be using your old gold clubs, driving your car, etc. :twisted:

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