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it is more connected to reality than you seem to be.
you have many financial folks telling people that they need not save as much or figure their savings or income with inflation adjusting . the reason being data like the bls shows spending falling off a cliff as you get older and older.
the fact is the data is incomplete and should not be used to determine whether you need more or less income.
the data never tells us whether the drop in spending from 65 to 95 is because of voluntary spending cuts or forced spending cuts because you don't have the dough to spend.
by 80-95 you already spent down decades of savings and if you did not plan well or invest well many are dwindling at this point.
their spending cuts are not because they don't want to spend but because they can not spend because they do not have the money to do it.
throw in the fact the 65 year old group had much higher earnings over their career than the 90 year old. the 65 year old group has larger social security payments , a larger pension and more money to spend.
now you are comparing the 65 year old group with the 90 year old group with dwindling savings and saying , see spending falls as we age.
maybe not!.. it may be a case of income falling and spending has to be cut along with your quality of life..
as a planner or financial writer you may be hurting your clients by telling them the bls spending shows you don't need as much money saved or such a large income because you will spend less.
to that i say maybe , maybe not . we don't know what the data means as it is not complete enough to base anything on .
sure ,an 80 year old could live with a denture if they didn't save enough dough but if they had the dough a 25k implant job makes for a world of difference in the quality of life.
my own opinion is we will spend as much as we can for as long as we can. when we no longer spend as much on ourselves it shifts to helping the kids or doing things for the grandkids.
the money will always find a home if it is there.
i think those that plan around the fact they are counting on spending less as they age may be setting themselves up for a quality of life hit later on. then spending will drop and they will be miserable not being able to do certain things and they will get to be part of the bls data eventually that says , see we spend less as we age.
that is despite the fact if they had more they would spend more.
that all ties right in when people are planning their retirement income. it relates to how much they think they will need to maintain their quality of life and their spouses quality of life.
Last edited by mathjak107; 06-10-2013 at 05:38 PM..
i think those that plan around the fact they are counting on spending less as they age may be setting themselves up for a quality of life hit later on. then spending will drop and they will be miserable not being able to do certain things and they will get to be part of the bls data eventually that says , see we spend less as we age.
What certain things do you have in mind that a person their 80s or 90s might do?
I look at my own parents who are both still alive and in their 90s. They are still hoarding hundreds of thousands of dollars and yet just live in a nice retirement home and really don't and can't do much of anything at their age but sit and watch TV. It's nice they want to leave something for the kids, but why not have spent more of it when they were younger?
What better quality of life are you looking at when you use a walker to get everywhere, can't go out, can't travel and like most old people, don't really care about all the latest gizmos like the newest IPhone. What are you saving for, a better walker or wheelchair?
it is more connected to reality than you seem to be.
Uh-huh. By the way, over here in reality-land where the population professionally prepares and analyses these sort of things, the word "data" is plural. It's just the outsiders and neophytes who manage to futz that up.
the best reason i can give is you want your spending to fall off by choice as you age and not because it has to because you don't have enough income.
by not assuming your spending will fall of a cliff you don't under plan and that is key.
you have slack in your plan for unexpected emergencies , expenses , illness, divorce and helping out family members if needed .
the retirement grave yard is filled with failed retirements because folks assumed wrong and under planned their finances .
having some extra money saved is a whole lot better than living in poverty because you didn't plan around saving enough.in fact poverty runs higher and higher as you age. it will get worse too as out of pocket medical costs get higher and higher.
it is up to you , how you want to plan. i know i will plan for things not falling off . if i am wrong i will just have more than expected , the reverse has far worse consequences of being wrong.
Statistics that show older retirees spend less do not demonstrate that they are inclined to spend less. they only reflect the fact they may have less and or that they are less willing to spend considering all of the future unkowns.
If you gave almost any one of them an extra million dollars, they wouldn’t have any trouble spending it.
there are loads of ways your quality of life can be improved by having enough money.
the biggest reason is to have CHOICES IN LIFE.
Last edited by mathjak107; 06-11-2013 at 03:21 AM..
we have had many discussions on survivor benefits. many folks were shocked to find out that if the benefits are taken early by the main bread winner the surviving spouse if younger may get a double hair cut if they have to file early too so they can make ends meet.
the main bread winner gets a reduced benefit for filing early and the surviving spouse gets a reduced benefit off the already reduced benefit if they file also before fra.
a spouse filing for survivor benefits at age 60 from a spouse who filed at 62 for their benefits can see a 47% reduction from what it would have been had the spouse taken it at fra instead.
not a problem if you have the assets for your spouse , but many times it is those that file at 62 for whatever reason who can least afford the benefit cut
What amount the spouse gets has never been clear to me. If the husband takes SS at 62 and his wife also takes it at 62 and she has never worked and his SS amount is 1600 per month, what amount will she get? According to what is stated above, if I understand correctly, the amount would be 53% of the husbands benefit of $1,600. Is that correct?
what was stated above pertains to survivor benefits .they work differently than regular ss.
for regular ss here you go , this is the percentage of the husbands full benefit a non working spouse would get . everything is based off of what the husbands full benefit would have been regardless of whether he filed early or not.
What certain things do you have in mind that a person their 80s or 90s might do?
I look at my own parents who are both still alive and in their 90s. They are still hoarding hundreds of thousands of dollars and yet just live in a nice retirement home and really don't and can't do much of anything at their age but sit and watch TV. It's nice they want to leave something for the kids, but why not have spent more of it when they were younger?
What better quality of life are you looking at when you use a walker to get everywhere, can't go out, can't travel and like most old people, don't really care about all the latest gizmos like the newest IPhone. What are you saving for, a better walker or wheelchair?
Everyone's different. When my grandfather was 88, he disappeared and we were worried that he might have died. The landlord broke into his apartment, grandpa wasn't there, and all his luggage was gone. A few days later we got a postcard from a very foreign country. He went on an international trip and forgot to tell anyone.
He died *15 years* later, having spent his considerable fortune.
So you don't know what you'll want to do in your 80s or 90s, do you? I will want to travel and go to nice restaurants, the symphony, and such. Whether I can or not remains to be seen. But if I can, I'll need the money.
some very interesting finds in the senior spending study done by sun life was that not only did spending on luxuary items like expensive cars ramp up in the 70 age bracket but while international travel fell off in the late 70's ,domestic air travel held strong well in to the 80's.
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