Newsweek recently published an article on retirement planning that said most planners are painting the wrong picture. These retirement advisers advise those seeking their advice and assistance that their spending levels will remain level. In actuality, most people reduce their spending during retirement.
There are generally four separate phases to retirement:
- THE EARLY YEARS: In the early years, retirees are likely to travel more and spend money on home improvements, vehicles, and so on.
- THE MID-YEARS: As they move into the mid-period, retirees’ activities and spending decreases.
- THE LATER YEARS: This decrease continues into the later retirement years.
- THE FINAL YEARS: Toward the end of their lives, retirees begin spending what they have left on their healthcare, long-term care and personal assistance needs.
This decrease in spending is confirmed by the Bureau of Labor Statistics. According to BLS, if you were between 55 and 64 in 2008, you spent $54,783.00. If you were between 65 and 74, you only spent $41,433.00. And if you were over 75 you only spent $31,692.00. This is a decrease of 42% from the youngest to the oldest groups in this study.
What does this tell you? If you are approaching retirement, you should plan on the early years being the most expensive and try to limit withdrawals from your savings to approximately 4% per year to make your retirement funds last.
Retirement planning is just one aspect of estate planning you should consider as you near that magic age. Please contact us for an appointment if you would like advice and assistance on your impending retirement.
Jerry Shiles
Attorney at Law
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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