The University of Michigan recently released their survey results examining Retiree Spending patterns in the U.S. The big finding of the report was that for single retirees, real spending declined after the age of 65 at a rate of about (-1.7%) a year; for coupled retirement households, the decline was (-2.4%) a year.
Contradictory to traditional planning that assumes people spend more money every year after age 65. These results even held true to the wealthiest group of survey participants showing the same spending declines as those with less wealth.
Younger, more vigorous retirees are more inclined to take trips & eat out and by their early 70s become less interested in luxury as they age. The median retiree household age 65-69 spent $28,505 (single) or $53,990 (married) a year, while retirees in their 80s spent $26,094 and $38,885. Unfortunately, these numbers also highlight the disparity of wealth in America. The study broke down spending by group and found that trips and leisure expenses fell the farthest as people got older, while healthcare expenses were surprisingly stable, especially for coupled households. In all age categories, the biggest percentage budget items were Housing @ 23-25%, Food @ 16-19% & Utilities @ 12-17%.
This healthcare statistic may surprise some who had assumed that, later in life, people will have to allocate dramatically more to medical expenses than they did when they were younger and more vigorous. The study referenced an earlier study, which found that, for most individuals, the last year of life will average a modest $6,800 in out-of-pocket payment for doctor and hospital visits; the healthcare percentage of a household’s budget averaged just 14% for people over 80 (compared with 9.4% for the youngest retirees). While only roughly 10% of the sample accounts for 42% of the out-of-pocket healthcare spending in the later years of life.
Check out the Detroit Business Journal’s follow-up article on the recent growth at SGH Wealth Management on in the Top Link Below: