Lindell G. Douglas, CFP®
Managing Partner

(954) 306-8668

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 $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

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 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? 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, 2020
2. BlackRock.com, 2023. (Based on a 2017 landmark study that looked at retirement spending.)

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

Dog Bites and Homeowners Insurance

Dog Bites and Homeowners Insurance

Reviewing coverage options is just one thing responsible pet parents can do to help look out for their dogs.

Year-End Charitable Gifting and You

Year-End Charitable Gifting and You

This article may help you maximize the benefits of your donation for your chosen charity.

A Home Insurance Claim: To File Or Not To File

A Home Insurance Claim: To File Or Not To File

Learn when it may not make sense to file a claim on your home insurance.

 

Have A Question About This Topic?







Thank you! Oops!

Conquering Retirement Challenges for Women

Looking ahead can help you conquer these unique obstacles.

The Value of Insuring Against Life’s Risks

Building wealth requires protection from the forces of wealth destruction.

How to Invest in LGBTQ+ Friendly Companies

This article allows those who support LGBTQ+ interests to explore the possibilities of Socially Responsible Investing.

View all articles

Paying Off a Credit Card

Enter various payment options and determine how long it may take to pay off a credit card.

Self-Employed Retirement Plans

Estimate the maximum contribution amount for a Self-Employed 401(k), SIMPLE IRA, or SEP.

Federal Income Tax

Use this calculator to estimate your income tax liability along with average and marginal tax rates.

View all calculators

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

Long-Term-Care Protection Strategies

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

An Inside Look at Retirement Living

A number of questions and concerns need to be addressed to help you better prepare for retirement living.

View all presentations

Risk Tolerance: What’s Your Style?

Learn about what risk tolerance really means in this helpful and insightful video.

Retirement Plan Detectives

A couple become Retirement Plan Detectives, searching records from old employers.

The Cost of Procrastination

Procrastination can be costly. When you get a late start, it may be difficult to make up for lost time.

View all videos