Retirement Spending Is Not a Straight Line

[Lsbcal]

...(snip)...

the 85-95 group may be great depression babies and their spending may have lagged their entire lives.
...

This is an interesting thought. People who are 83 now were 20 (starting jobs) in 1950 and so were probably riding the US prosperity wave.

But maybe they and some of the younger ones (like those currently 65 to 83) were directly or indirectly affected by their parent's Depression era traumas. I know I was.

 

[Katsmeow]

Nursing home and assisted living expenses aside, I am watching this play out in real time with my parents in their early 90's who are determined to stay in their home. So they've hired maids, lawncare, pool maintenance - all things they did for themselves until the past 2-3 years. They have also had to hire people for most basic household breakdowns that my Dad would have happily fixed himself, he simply can't do it himself anymore. And I live 2200 miles away, so I do all I can when I am there - I repaired their fence gates last time, Dad knows what to do just doesn't have the strength to do it. Bottom line, their living expenses have increased by at least 1/3rd, and the inconvenience of having to call someone and wait to fix things has been frustrating for them. DS has offered to move in with them, and that will eventually be the next chapter one of these days.

So expenses will probably go up somewhat at least with/without nursing/assisted living IME.

This is why I think people should sit down and try to project out their own expenses year by year to get some idea of how things might change.

For my own mother (almost 90), she does now pay for house cleaning and yard work which she didn't use to do. Even so, that increase in cost is more than offset by her not wanting to do much driving, being tired enough that she doesn't like to go out all that often and other reductions in activity chosen by her (note that this has nothing to do with lack of money - she doesn't like to go out and do stuff even if we are paying).

In my own case, for example, in the projected budget I have included expenses for things like yard work that we do ourselves now. However, we aren't big on DIY repairs/maintenance so there probably won't be much overall change increase in spending in the future based upon this.

OTOH, some might have projected savings due to likelihood of less travel in advanced old age. However, for us, we don't get a lot of savings out of that since our budgeted travel is already fairly low.

So, this really is individual.

 

[mathjak107]

This is an interesting thought. People who are 83 now were 20 (starting jobs) in 1950 and so were probably riding the US prosperity wave.

But maybe they and some of the younger ones (like those currently 65 to 83) were directly or indirectly affected by their parent's Depression era traumas. I know I was.

Well we never really had a definitive study thst proved anyone who can still afford it spends any less as they age then they did prior.

Many just shift from spending on themselves to spending on others.

The 65 year olds today will have larger incomes than the 65 year olds of decades ago who are now much older. They will show they are spending more than the 90 year old group but it may just be income related.

Most older folks spend less from having less more ofton than not.

 

[jebmke]

The 65 year olds today will have larger incomes than the 65 year olds of decades ago who are now much older. They will show they are spending more than the 90 year old group but it may just be income related.

As more and more people hit RMD time (or start withdrawing by choice), this will jump up tax burdens since this younger cohort will have been in tax deferred savings for longer than earlier generations. That will pump up spending quite a bit for some in my generation.

 

[mathjak107]

it is the age old sill un-answered question about senior spending. don't think for one second that seniors won't be able to spend or want to spend that extra million you hand them. they will all spend it very easily.

i would venture to say say studies that show spending less as we age are showing it because seniors brought less to the party , have lower incomes FROM PENSIONS AND SS THAN MORE RECENT COUNTERPARTS or already spent down quite a bit and are fearful of running out of money.

throw in differences in cultural backgrounds, mental obstacles like being a great depression kid and we may find these cuts the bls shows are out of need rather than choice.

 

[pb4uski]

Interesting thread. From what I have observed of my parent's generation, spending early in retirement is higher because of travel and higher level of activity and then trends down as one ages but is still capable but less active and then increases when one becomes less capable of taking care of themselves and have to rely more on hired help or assisted living or ultimately a nursing home. Mom is currently in that middle stage but clearly will need more assists in the near future.

While I'm not planning on reduced spending in that middle state I think it is likely.

 

[REWahoo]

Based on my (admittedly limited) observations, my own experience and personal opinion, most of us who retire with reasonable assets will see a U-shaped spending trend. Barring sudden death, that seems the most likely pattern and eight years into our retirement, we seem to be on that path.

 

[Corporateburnout]

He sounds pretty wise! I like his advice.

It's hard for me to imagine retiring in a big house with stairs. That must be quite a burden. I suppose that if I was in a house like that, I'd stay on the first floor almost all the time and get one of those stair lift chairs to use when I absolutely had to go upstairs.

In a sense, I guess I was lucky. I divorced at 50, never a pleasant process, but the silver lining is that by the time I could afford to buy a house I was already 54. Consequently my house is reasonably practical for my old age.

3 years ago we sold our 2500 square foot home with the large yard and the in-ground swimming pool and moved to a similar size townhouse with a first floor bedroom and a full bathroom currently used for guests that could become our master bedroom when we no longer willing or able to climb stairs. When we get to that point we will install a chair lift for the occasional second floor visit.

 

[Katsmeow]

it is the age old sill un-answered question about senior spending. don't think for one second that seniors won't be able to spend or want to spend that extra million you hand them. they will all spend it very easily.

I think you are overstating the case considerably. I've known several people (my family and DH's family) in very old age who didn't spend anywhere near as much money as they could have safely spent. They just didn't have the desire to do so. My own mother has turned down going out or going on trips (that we would pay for) simply because she finds it tiring to go out (she is almost 90). My aunt and uncle spent very frugally in old age even though they had the money to easily spend more.

I'm sure there are people who would easily spend more if they had an extra million (I probably would myself), but I don't think the evidence should that "all" would do so or that the only reason anyone decreases spending in old age is lack of money. While I have no doubt that is true for some, I don't think there is any evidence that that is the sole reason for everyone.

 

[pb4uski]

+1 My mother could spend 4x what she does but has no such inclination. In fact, we have to bug her a bit to spend money on things she should (new roof, windows, etc) because she typically views the status quo as "good enough". I've managed her substantial investment portfolio since my Dad died and she never even asks about it. Grandmother was the same - lived on SS and still put money in the bank after giving away over $100k to her 4 children. There comes a time that you are just "putting in laps".

 

[Moemg]

My Mom is 97 and her spending is probably the same but instead of spending it on vacations she spends it on an independent living apartment . If she suddenly got a windfall she probably would not do anything different . There comes an age where just living a quiet life is enough .

 

[youbet]

My Mom is 97 and her spending is probably the same but instead of spending it on vacations she spends it on an independent living apartment . If she suddenly got a windfall she probably would not do anything different . There comes an age where just living a quiet life is enough .

Sometimes it costs money to "live a quiet life." Literally.

We've had DW's mom in a NH for several months now. She'll be private pay for a few months and then switch to Medicaid. She'd LOVE to have a private room because she loves quiet and privacy. Being in control of her own environment is very, very important to her. But she can't afford it. The home we managed to get her into, despite her meager financial status, is quite nice vs. the many others we toured. Still, with a roommate, MIL is unhappy. Stoic, by unhappy.

In her case, there was never an opportunity to decide "spend now or spend later," so the question is moot. She was always in a low income situation.

DW and I do have choices. We're doing fine today using a spend rate based on constant, inflation adjusted spending. I suppose it would be nice to switch to the Bernacke plan and add some thousands of dollars to our annual budget for extra travel or entertainment. Then we think of MIL and decide we'll leave things as they are........ One of us might prefer to have a private room too.