A lot is written on the income you will need in retirement. Some experts talk about income replacement of 60-70%đź‘Žothers 70-80% đź‘Žand then there are cautious folks like me who say plan on 100% replacement with a nice cushion of extra savings đź‘Ťbecause your overall expenses will not decline in retirement, they will just be different. You will spend more money on fun stuff like travel and hobbies and some on not so fun stuff like health care; probably both.
However, how you spend that money in retirement will change over time, stages of retirement if you will. The problem is we don’t know when each stage will occur. It will be different for each person; by many years. It also depends on when you begin retirement. You will need a lot more money if you retire at that magical age 55 then if you retire at 70. You will also likely be in stage one spending for a longer period.
It’s really something to think about and plan for. đź‘€
Here is an interesting article on the topic. Be sure to read the full story at the link below.
Do you behave the same way you did 20 years ago? Are your spending habits the same? What about your saving behavior and income?
If the absurdity of those questions made you laugh, you’re like a lot of Americans whose financial habits have evolved over time. The same goes for your retirement years. Although you have probably calculated the value of your nest egg in terms of annual retirement income, what you will be spending immediately after leaving the working world will likely be very different as you move further into retirement.
The average retiree can expect three phases of retirement: early retirement – a period of travel, hobbies and adventure; middle retirement – a stage marked by socializing, activity and relaxation; and later retirement – a time of winding down, when most of your days are spent at home.
It’s logical to assume the costs of retirement will vary among phases. Spending habits at age 50 are definitely not the same as they were at 25. Likewise, your spending at age 85 will look different than age 65. Therefore, a retirement plan that includes specific “buckets” of money for each phase allows for more flexibility and helps ensure you won’t outlive your nest egg.
via 3 Stages of Saving and Spending in Retirement – US News.
QUINNSCOMMENTARY 