Mar 26

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Government data supports retirement spending decreases

One of the important financial questions facing retirees is whether they have sufficient retirement savings. This is impacted by what one wants to assume will occur with post-retirement spending. Of course, income taxes will decrease once one is no longer actively earning money in retirement, for this reason, the rest of this article excludes income taxes.

The opinions regarding post-retirement spending are highly variable, with little consensus existing. Many argue that retirement spending will actually grow in retirement because (i) healthcare expenditures significantly increase as one ages, and (ii) travel, entertainment, and hobby spending increases as retirees enjoy activities that were delayed while they were busy working. Others contend that retirement spending decreases as one downsizes a home, and purchase less “stuff” since these desired material possessions are already acquired.

In this article, we summarize and analyze government data about spending as one ages. The possible impact of your personal budgeting is that you may determine that you might reasonably forecast less spending than what some commentators suggest. We also provide links to other retirement online calculators and advice.


About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

Permanent link to this article: http://betweenthenumbers.net/2012/03/government-data-supports-retirement-spending-decreases/

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