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Expenses at 85+
Old 03-15-2007, 07:47 PM   #1
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Expenses at 85+

The how long do you plan to live thread got me thinking more about the old-age phase of retirement.

Part of my ER planning process is thinking about the kind of lifestyle I want to lead during retirement, and estimating the spending necessary to support that lifestyle. I can do this for the 50's, 60's and 70's, but I'm having a hard time picturing what I'll want to be doing at 85+, so I have no idea what to plan for expenses.

Unfortunately, I don't have any relatives or acquaintances in the 85+ group to get advice from.

Has anyone else thought through this question or found any articles, etc that deal with old-age spending needs? I've read tha Bernicke article about decreasing expenses with age, but average spending across a cohort doesn't help explain what individuals wish they could spend.
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Re: Expenses at 85+
Old 03-15-2007, 08:00 PM   #2
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Re: Expenses at 85+

My 92 year- old MIL lives a very happy life on about $1600 per month. Her excellent health insurance is from the state of MD and costs about $75 per month including drug coverage.
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Re: Expenses at 85+
Old 03-15-2007, 08:10 PM   #3
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Re: Expenses at 85+

Quote:
Originally Posted by citril
The how long do you plan to live thread got me thinking more about the old-age phase of retirement.

Part of my ER planning process is thinking about the kind of lifestyle I want to lead during retirement, and estimating the spending necessary to support that lifestyle. I can do this for the 50's, 60's and 70's, but I'm having a hard time picturing what I'll want to be doing at 85+, so I have no idea what to plan for expenses.

Unfortunately, I don't have any relatives or acquaintances in the 85+ group to get advice from.

Has anyone else thought through this question or found any articles, etc that deal with old-age spending needs? I've read tha Bernicke article about decreasing expenses with age, but average spending across a cohort doesn't help explain what individuals wish they could spend.
I would guess since that a majority of members on this forum are in the 'delayed gratification club', they will run FireCalc on their 85th birthday and discover that their SWR is over 8%. They will rush out and buy the latest Corvette and cruise main and try to pick up some chicks.
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Re: Expenses at 85+
Old 03-15-2007, 08:22 PM   #4
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Re: Expenses at 85+

Here's a book I plan to read in about 20 years:

Aging Well

"We all need models for how to live from retirement to past 80--with joy," writes George Vaillant, M.D., director of the Harvard Study of Adult Development. This groundbreaking book pulls together data from three separate longevity studies that, beginning in their teens, followed 824 individuals for more than 50 years. The subjects were male Harvard graduates; inner-city, disadvantaged males; and intellectually gifted women.
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Re: Expenses at 85+
Old 03-15-2007, 08:27 PM   #5
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Re: Expenses at 85+

Here is a Canadian report from 2004 on the subject of health care use in old age. Caution: health care costs will be different (read: higher) in the US. However, it is generally accepted that, across adult populations in Western countries, at least half of a person's lifetime health expenditures occur in the final year of life. Things would be quite different in a society that did not accept aggressive interventions at the end of life. Also of note: women live longer than men, and without spouses to look after them, generally are more likely to spend time in long term care.

Here are some US data from the Dartmouth Atlas (rollover the map). There is a large variation between states. If you want to avoid being put on a ventilator against your will, be sure to write and communicate your living will. Hopefully your state will honor it.

I would like to see a version of FireCalc that addresses these financial needs.
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Re: Expenses at 85+
Old 03-16-2007, 01:08 AM   #6
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Re: Expenses at 85+

My parents are in their 80's.

I don't think their expenses have decreased significantly, merely shifted categories.

More on health care, eating out (less hassle than cooking), property taxes

Less on travel, clothes, gas, and general entertainment
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Re: Expenses at 85+
Old 03-16-2007, 02:02 AM   #7
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Re: Expenses at 85+

Quote:
Originally Posted by citril
Has anyone else thought through this question or found any articles, etc that deal with old-age spending needs? I've read tha Bernicke article about decreasing expenses with age, but average spending across a cohort doesn't help explain what individuals wish they could spend.
Thought about it a lot........

This is another one of those cases where one size doesn't fit all, despite strong feelings some on this board have that their way is the only "right" way!

I wound up concluding that I have no way of accurately predicting what my spending needs/wants will be from 80 on...... if I'm even here at all. So I throught through some possible scenarios and how funding them would impact when I could RE and how much I could spend. These scenarios included:

1. I wanted DW and I to both be reasonably self-insured for LTC. This included calculating the expenses of one being in LTC and the other not and both being in LTC.

2. I priced out the possibility of having significant physical limitations and only being able to stay independent by hiring lots of expensive help.

3. Assumed a big bump in health care costs.

4. I ran a scenario where DW and I are still healthly and at home in our 80's but instead of the travel and entertainment expenses of our 60's and 70's, we're enjoying the heck out of paying for one of the grandkids to go to medical school or giving them each a down payment for their first home, etc.

The bottom line was that it was easy to construct scenarios where, despite many of the expenses of earlier years being greatly reduced, we could easily spend as much in our 80's as we did when younger, either out of necessity (nursing home) or joy (give it away).

The part that is particular to us is that we didn't RE until quite late in life (58) and a retirement budget we are quite content with is supported by a WR of less than 4%. We aren't really doing without anything we truly crave now in order to maintain our current spending through our 80's.

I understand that for many, their personal circumstances and desires drive them towards withdrawal schemes and budgets that shrink in real terms over time in order that they spend more early and less later. I have no issue with that.......for them.





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Re: Expenses at 85+
Old 03-16-2007, 03:38 AM   #8
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Re: Expenses at 85+

My grandma and 2 grandaunts lived till high into their 90s.
The grandaunts were in retirement homes for the last 2-3 years of their lifes.
While they were at home their expenses did not increase but rather decreased compared to their 70s. They did not like to go out any more, reduced travelling, did not like to shop for clothes any more and only replaced what broke. They enjoyed their home and to take care of it with a little help from a cleaning lady, listened to radio and TV, read the newspapers and re-read their books. They all told me that they did not miss anything as they had all their lifetime experiences in their heads.

At that time I found statistics that the average time in retirement home / higher care facilities is not more than 2 years, in intensive care about 6 months. I did not research but that is in line with what I saw while visiting the grandaunts. So I am planning to build and keep reserves for 3 years in a nice private retirement home for DH and myself, 1 year of this in intensive care.
We will see how this works out...
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Re: Expenses at 85+
Old 03-16-2007, 05:32 AM   #9
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Re: Expenses at 85+


I don't allow for any change. People in my family seem to have the long life genes. We also have a long history of the senior generation not living alone, but moving in with the next generation, or vice versa, because that's what's right to us, not about money.
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Re: Expenses at 85+
Old 03-16-2007, 05:53 AM   #10
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Re: Expenses at 85+

I just have to make sure I have enough money to marry a women in her 20's.

If I can't do that, hiring a hot young nurse will have to suffice.

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Re: Expenses at 85+
Old 03-16-2007, 07:24 AM   #11
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Re: Expenses at 85+

I took a trip Phoenix a few weeks back to see my sister. Another sister (76 y/o) came down from Steamboat Springs CO. Her 80 y/o BF stayed behind to go skiing. He has two artificial hips, recently led what he describes as his last, Grand Canyon rafting trip, and skiis every day in the winter. The odds are great that by your 80s, and certainly by your late 80s, you will slow down significantly and won't be spending big bucks on traveling and restaurants (both big ticket items in my budget). But with advances in health care, who knows. I plan on funding an active lifestyle for the duration. I use 95 for the calculations and figure I can adjust the budget downward a bit if miracle longevity enhancers appear.
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Re: Expenses at 85+
Old 03-16-2007, 09:38 AM   #12
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Re: Expenses at 85+

I'm feeling pretty gratified right now, so I dont think I'm in the delayed gratification club.

But I do realize that I may need in-home nursing, long term care and a lot of people to do all the stuff I do myself right now.

Cant imagine changing the oil in my car or climbing up on my roof in my 80's. Although my dad still does a lot of that stuff at 73 and doesnt seem to be slowing down too much.

If all else fails, I think i'll just skip the corvette and get a nurse that looks like my avatar.

Maybe my son will have some great business ideas and need a financier. Maybe his kids will too.
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