Retirement Spending: Tips and Research Findings

What will your retirement spending look like? As you plan for retirement, you’re probably looking at expenses and inflation to estimate your needs. But some calculators and techniques can cause problems, which might lead you to think you need more (or less) in savings and income than you actually need.

Let’s look at some findings and popular assumptions to see how they stack up. We’ll see how a fixed inflation adjustment isn’t always the reality. That’s what we see through some studies from actual bank account spending as well as retirement researchers.

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For example, the Retirement Spending Smile suggests that you might spend at roughly inflation minus 1% (although healthcare could inflate at a faster rate). As a result, not all of your spending needs to keep up with inflation. That said, later in life, those healthcare costs make an impact. Or, retirement spending stages known as Go-Go, Slow-Go, and No-Go years can also require a bit less saved for retirement. That’s because you periodically cut spending (at least in the assumptions) as you slow down in life.

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SOURCES MENTIONED:
Retirement Spending Smile: https://www.financialplanningassociat...
BLS Consumer Expenditure Survey: https://www.bls.gov/opub/reports/cons...
Read more: https://www.approachfp.com/retirement...

Whether or not any of those will actually happen as assumed is unknown, so you have to make whatever assumptions you’re comfortable with. Nobody can predict the future, so it’s crucial to research this more and seek advice from financial, tax, and other professionals before you make any decisions.

We also take a look at average spending in retirement. There are two sources here. One includes relatively well-off households, and the other is a broader set of households using the Survey of Consumer Expenditures (from the Bureau of Labor Statistics). It may be interesting to see how you compare, but remember that comparison is the thief of joy. Actual spending needs depend on where you live, your lifestyle, your health, and other factors.

As you plan for retirement, think about the retirement spending patterns shown here, and run some numbers to explore some possibilities.

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CHAPTERS
00:00 Intro
00:52 The Traditional Way: Standard Inflation
01:56 Retirement Spending Smile
02:58 Go-Go, Slow-Go, No-Go Years
04:03 More Resources
04:23 How Much Will You Spend in Retirement?
09:44 Where Do Retirees Spend Money (And How Much)?
12:34 Logistics of Spending
14:49 Tips to Manage and Maximize Spending

IMPORTANT:
It's impossible to cover everything you need to know in a video like this. The only thing that's certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. This video is not a substitute for individualized, personal advice. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. ““Likes” should not be considered a positive reflection of the investment advisory services offered by Approach Financial, Inc. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with extreme skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registration.