Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
One-in-Five Elderly Outspend Income
Old 02-20-2013, 08:18 AM   #1
Full time employment: Posting here.
SumDay's Avatar
 
Join Date: Aug 2012
Posts: 799
One-in-Five Elderly Outspend Income

Quote:
About 60% of elderly American households spend less than their incomes.

.....

Specifically, the report says in 2009, 14.3% of households with members ages 65 and older had spending that exceeded 175% of their household income. One-in-five households (19.2%) age 65 outspent their income by 50% or more.


PLANSPONSOR.com - OneinFive Elderly Outspend Income
__________________

__________________
SumDay is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-20-2013, 08:23 AM   #2
Thinks s/he gets paid by the post
ls99's Avatar
 
Join Date: May 2008
Posts: 4,792
I am not one of those.
__________________

__________________
There must be moderation in everything, including moderation.
ls99 is offline   Reply With Quote
Old 02-20-2013, 09:06 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,812
Link to EBRI report: http://www.ebri.org/pdf/briefspdf/EB...83.IncmEld.pdf
__________________
Independent is offline   Reply With Quote
Old 02-20-2013, 09:16 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,812
We're in the "spending more than income" group.
__________________
Independent is offline   Reply With Quote
Old 02-20-2013, 09:28 AM   #5
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,689
I will be spending more than my income after retirement as I draw down my portfolio. Nothing bad about that IMHO.
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 02-20-2013, 10:01 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Feb 2011
Posts: 1,629
Outspending income a bit is to be expected, but so many doing so by 50-175%?
__________________
ERhoosier is offline   Reply With Quote
Old 02-20-2013, 10:34 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,697
"one in five" means that 80% do not outspend income, doesn't it? I like those odds.

Also, it's one thing to outspend your income every few years for some special expense; different if it is every year.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 02-20-2013, 10:53 AM   #8
Recycles dryer sheets
Stanley's Avatar
 
Join Date: Jan 2013
Posts: 194
My guess is that most people here are in the 80% of those who don't outspend their income. And of those who do, it is part of a well planned strategy.
__________________
Stanley is offline   Reply With Quote
Old 02-20-2013, 11:12 AM   #9
Full time employment: Posting here.
Tyro's Avatar
 
Join Date: Aug 2012
Location: Upstate
Posts: 699
We haven't quite settled on what our "income" should be, but we did outspend our budgeted expenses by a sizable margin, which was a bit disconcerting, and may be a problem if it becomes the norm.

Tyro
__________________
Yeah well, that's just, ya know, like, your opinion, man. ~ The Dude
Tyro is offline   Reply With Quote
Old 02-20-2013, 11:24 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by Live And Learn View Post
I will be spending more than my income after retirement as I draw down my portfolio. Nothing bad about that IMHO.
We're in agreement.

Like much you see and hear in media discussions, the devil is in the details. The article trys to imply that certain groups are spending beyond their means in retirement. And, I don't doubt that is true. But the issue isn't a matter of spending more than income. It's a matter of spending more than your income plus a reasonable withdrawal rate from your retirement savings.

Almost 7 years into RE, we're spending more than our income. About half our budget in retirement is supported by DW's pension and my SS. The other half comes from savings which, at this time, means non-deferred savings and withdrawals are not part of income. Later, when we are subject to RMD's, I suspect we'll be spending at income or perhaps less than income since RMD's are considered income.

Perhaps the article should have used the expression "spending more than they can afford" or something like that. Saying "spending more than income" might be a good thing, a bad thing, or whatever depending on your total retirement financial situation.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 02-20-2013, 11:49 AM   #11
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,689
Quote:
Originally Posted by Tyro View Post
We haven't quite settled on what our "income" should be, but we did outspend our budgeted expenses by a sizable margin, which was a bit disconcerting, and may be a problem if it becomes the norm.

Tyro
sorry to hear that what were the biggest surprises / budget busters ?
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 02-20-2013, 11:54 AM   #12
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,834
I spent less than my pension+dividends last year. I consider my pension plus dividends to be my income, although my AGI is much larger since I am trying to minimize my future RMD's for tax purposes. Also I don't count capital gains as income.

Then again, for some years in the future I might spend more than my income, due to unexpected expenses, buying a house, or whatever. Spending less than my income is not a hard and fast rule for me. It's just the way things have been working out.

The article says, "Health care and home-related expenses are the biggest drivers of income deficit." Why am I not surprised? If I needed to spend more some years than others for health care, or to buy a new home or remodel my present home, I surely would do that without even thinking twice.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Old 02-20-2013, 02:03 PM   #13
Recycles dryer sheets
Ultimate Cheapskate's Avatar
 
Join Date: Jun 2008
Posts: 134
I agree with some of the earlier posters. In fact, given the percentage of non-seniors who spend more than they earn (typically estimated at 30-60%, depending on how you define it and demographics), seniors seem to be doing a much better job, on average, of living within their means than the rest of the American public. And if you look at Consumer Expenditure Survey data, you'll see that (again, on average) spending on everything other than healthcare tends to drop significantly and continually as people age beyond their fifties; as I like to say, "Aging causes I.F." ("Increased Frugality"). Factor in, as others have pointed out, that many seniors are consciously drawing down their assets as they age, according to plan, and I really don't see much shocking about this latest news flash.
__________________
Ultimate Cheapskate is offline   Reply With Quote
Old 02-20-2013, 03:37 PM   #14
gone traveling
 
Join Date: Jul 2007
Posts: 333
Quote:
Originally Posted by youbet View Post
Like much you see and hear in media discussions, the devil is in the details. But the issue isn't a matter of spending more than income. It's a matter of spending more than your income plus a reasonable withdrawal rate from your retirement savings.

Perhaps the article should have used the expression "spending more than they can afford" or something like that. .
Very well said, am in full agreement.
__________________
HighRoller is offline   Reply With Quote
Old 02-20-2013, 05:26 PM   #15
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,687
Quote:
Originally Posted by ERhoosier View Post
Outspending income a bit is to be expected, but so many doing so by 50-175%?
Anyone that is spending from an aftertax portfolio while allowing a pretax portfolio to continue to grow would fall into this category.
__________________
Running_Man is offline   Reply With Quote
Old 02-20-2013, 08:49 PM   #16
gone traveling
 
Join Date: Oct 2012
Posts: 329
It's all semantics IMO.
Depending on your strategy, & in theory if you plan to leave for example zilch to your estate then what you have spent in a year equals your "income" drawn down from your total available funds. These funds include your principal, capital growth and investment returns.
__________________
UserRequested is offline   Reply With Quote
Old 02-20-2013, 08:52 PM   #17
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
I feel the same way.
Quote:
Originally Posted by ls99 View Post
I am not one of those.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 02-20-2013, 11:02 PM   #18
Thinks s/he gets paid by the post
timo2's Avatar
 
Join Date: Jul 2011
Location: Rio Rancho
Posts: 1,438
Looking at the income numbers in the EBRI Report, and then comparing them to the minimum incomes listed in the Elder Index The Elder Economic Security Standard - Wider Opportunities for Women needed to keep a household off of government aid, the 'one in 5' story makes more sense. Additionally, in 2012, average social security income was $14,760/year.

My interpretation is (notwithstanding all the financial nuances previously described in this thread) if a person's household income in retirement is less than $30K to $40K per year, it is really easy to overspend one's retirement income, especially for people with only Social Security income http://www.nytimes.com/2012/09/12/bu...anted=all&_r=0

The determination not to be broke when I'm old was the number one motivator for me to strive for financial independence. So now DW is the one retiring early at 57, not me, but that's OK and still counts as an accomplishment of my goal.
__________________
timo2 is online now   Reply With Quote
Old 02-21-2013, 10:54 AM   #19
Full time employment: Posting here.
Tyro's Avatar
 
Join Date: Aug 2012
Location: Upstate
Posts: 699
Quote:
Originally Posted by Live And Learn View Post
sorry to hear that what were the biggest surprises / budget busters ?
Unexpected expenses & expenses incurred earlier than expected -- major appliances, vehicle repairs, add'l taxes, whopping increase in health insurance (DW's megacorp renegged on retiree benefits).
__________________
Yeah well, that's just, ya know, like, your opinion, man. ~ The Dude
Tyro is offline   Reply With Quote
Old 02-21-2013, 11:05 AM   #20
Full time employment: Posting here.
Tyro's Avatar
 
Join Date: Aug 2012
Location: Upstate
Posts: 699
Quote:
Originally Posted by W2R View Post
The article says, "Health care and home-related expenses are the biggest drivers of income deficit." Why am I not surprised? If I needed to spend more some years than others for health care, or to buy a new home or remodel my present home, I surely would do that without even thinking twice.
Yeah, that's pretty much where we went over, and we expected that to happen eventually -- just not the first year.
__________________

__________________
Yeah well, that's just, ya know, like, your opinion, man. ~ The Dude
Tyro is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 12:19 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.