Spending as retirement progresses.

[NW-Bound]

Yes. But on the other hand, I strongly suspect the amount spent on "unusual items" is highly correlated to one's portfolio growth in a particular year. Or so I hope!

 

[Katsmeow]

Most studies I have seen conclude that spending levels off or drops as one ages, but I am not convinced that these studies properly accounted for limitations in the means of the retirees. If you spend down your assets, then your spending will have to reduce to the new limitations of your means.

From the people I have known I am convinced that spending usually does decrease with age independent of change in assets. My mother is in her late 80s and I have other relatives of similar age (including a 95 year old uncle who still drives and manages fine on his own). There is no question that in the last 10 years she has slowed down a lot and doesn't spend as much because she doesn't like to go out. Even when we visit her and we are paying, she usually doesn't want to go out to eat or other places as she feels it is tiring. She still drives but mostly keeps herself to going to the grocery store or other nearby stores or going to the doctor.

Yes, she spends some more money for people to help with various things but that is very much outweighed by the fact that she doesn't like to go out much, has low expenses overall (house was paid for over 40 years years ago), and she doesn't require any extraordinary expenses (ie she has someone she pays to mow the yard but she doesn't need a home health aide).

I find this is also true of the others that I know of similar age.

I often wonder if many posters, myself included, are just worrywarts. Look around, I see so many people living on much less. They would not understand the problems that we are so concerned with.

Well, yes. Maybe it is just my middle class upbringing but most of my relatives retired with far less assets than what appears to be average on this forum (as based upon the polls I've seen of portfolio sizes) and they have done fine. In fact, many of them have spent little or nothing from their portfolios living on SS or SS plus a small pension.

 

[Free To Canoe]

I just looked at my annual living expenses from 2000 through 2011 - the 12 years I have been retired. I have always felt that my basic living expenses were more or less flat, or at least had only risen slightly and most of that in recent years.

From Dec 2000 to Dec 2012, cumulative inflation was 29.7% according to InflationData.com's Cumulative Inflation Calculator

However, my basic annual living expenses only went up 2.3% over that time period. Yes - you read that right.

My basic living expenses include normal day-to-day expenses that occur annually which includes discretionary expenses such as travel, eating out, smaller toys and appliances.

It does NOT include expenses I consider "super discretionary" such as charity, gifting $$ to family, or large item one-off expenses such as buying a motorhome or the occasional computer or high-end camera body. Decisions to buy such things are made on a case-by-case basis when and if I feel I can afford them.

My year over year % change from 2000 in basic living expenses went like this:

Year YOY Since 2000
2001 -4.8% -4.8%
2002 +8.5% +3.36%
2003 -19.0% -16.3%
2004 +16.6% -2.4%
2005 -21.6% -23.5%
2006 -7.9% -29.5%
2007 +15.9% -18.3%
2008 +2.6% -16.2%
2009 -13.1% -27.1%
2010 +9.0% -20.6%
2011 +28.8% 2.3%

Some things definitely went up over that time period like health insurance which more than doubled. So obviously other expenses went down over the same time period.

We spent quite a bit more money on travel tours during the first three years. Then switched to much more RVing type travel over the next several years which was lower overall, however spending on fuel, groceries and eating out and maintenance increased during that same time period. Finally, in 2010 we did less RVing, but we moved into a new home with higher baseline expenses.

Just FYI - thought folks might find my "personal inflation" story interesting.

Audrey

This is good. We are starting year 5 and DW is flummixed (is this a word?)that there is a big standard deviation from year to year. Good to see that it happens to others, too.

 

[Danmar]

Yes. But on the other hand, I strongly suspect the amount spent on "unusual items" is highly correlated to one's portfolio growth in a particular year. Or so I hope!

Yes. most of the unusual items are discretionary so if things take a downturn we can defer or eliminate. Daughter's wedding would be the exception.

 

[SJ1_]

I had to laugh, since my (departed at age 88) FIL spent much more for the last ten years of his life, as his DW passed a decade early.

It seemed that he just "let loose" and was spending $$$ without regard for the future (of course, at his age, who could blame him ) after the death of his DW, and 50+ years of marriage.

He bought new cars, danced the night away (with more than a few different "partners"), traveled the world, and just "had fun" after he became a bachelor again (drove my DW nuts, with him acting as a "kid", again).

Sometimes, expenses don't go down as you age, if you're lucky ...

that is great!

 

[Finance Dave]

I suppose if you've got the data, it's true, but there's no way mine would be that low. Food costs alone are that high, not to mention gas, energy, home appliances, etc.

Fortunately, some things do come down. Examples would be large screen TVs and computers.

Perhaps your exclusion of large items is one reason, as I know cars have gone up quite a bit more than 2.3%.