Age related spending reduction

JoeEngland

Are there any generally accepted figures on how much spending reduces with age? I imagine that if retiring in mid-50s spending may remain constant, or perhaps increase a little, until 70-75 depending on health.

Marcon

Starter for 10: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/financialyearending2017

bostonerimus

The usual reference in the US is Bernickse's paper. I imagine there are official UK numbers you can also apply.

http://golio.net/My_Homepage_Files/Download/RealityRetirementPlanning.pdf

A good post on the subject is by Kitces

https://www.kitces.com/blog/age-banding-by-basu-to-model-retirement-spending-needs-by-category/

hugheskevi

A relevant UK research paper is at http://www.ilcuk.org.uk/images/uploads/publication-pdfs/Understanding_Retirement_Journeys.pdf

Figure 1 on page 4 shows consumption peaks at around age 65, and falls off from about age 70.

squirrelpie

Brilliant question and excellent answers. Thanks everybody! edit:spelling

kidmugsy

Have a peer at this one.
https://theprogenygroup.com/blog/retirement-planning-u-turn-on-u-shaped-spending/

Keep_pedalling

hugheskevi wrote: »

A relevant UK research paper is at http://www.ilcuk.org.uk/images/uploads/publication-pdfs/Understanding_Retirement_Journeys.pdf

Figure 1 on page 4 shows consumption peaks at around age 65, and falls off from about age 70.

Interesting, we are currently mid sixties, and going by that document are classeded as an extravagant couple, although I hope we can maintain that for at least another decade befor deteriating health slows us down.

Thrugelmir

There's plenty of ways of spending money in later life if you've plenty left. Holidays being an example.

bostonerimus

Thrugelmir wrote: »

There's plenty of ways of spending money in later life if you've plenty left. Holidays being an example.

.....and Nursing Homes being another.

Linton

Should statistics on average expenditure patterns drive ones retirement plans?
To lead a contented life one needs to get used to a particular standard of living where desires and needs match ability to pay for them. If my income was doubled I doubt it would make any difference to my expenditure but life would be difficult if income halved. It therefore could be dangerous to plan on reducing income as one ages. Expenditure may decrease but it should be because ones wants decrease, not through necessity because one has planned for them to do so.

Triumph13

Linton wrote: »

Should statistics on average expenditure patterns drive ones retirement plans?
To lead a contented life one needs to get used to a particular standard of living where desires and needs match ability to pay for them. If my income was doubled I doubt it would make any difference to my expenditure but life would be difficult if income halved. It therefore could be dangerous to plan on reducing income as one ages. Expenditure may decrease but it should be because ones wants decrease, not through necessity because one has planned for them to do so.

I'm pretty confident that my expenditure will drop off, simply because of a change in the ratio of active (and often expensive) days out, to quiet days recovering from them. I agree though that it would be foolish to bake this in to your plans. Fortunately, one of the advantages of having kids is that there will always be a use for any excess retirement income we have!