Three spending surprises

Phossy

JP Morgan published a report on based on the spending habits analysis of ~ 280,000 Chase households. US based, but I thought it was interesting and probably directionally relevant to the UK too.

Overall they do not see the much talked about 'spending smile', but see a constant decrease in spending over time (nice graph on page 2). Spending does not rise in-line with inflation. They do see a temporary 'surge' in spending as people retire, and this is seen more for households where they are partially retired.

Spending, though on average declining, does have significant volatility and they offer a categorisation of this.

Retirement INSIGHTS: Three new spending surprises 2025

Brie

I'm surprised they are surprised that couples don't retire at the same time. 

Yes I know some people do plan things that way but given that it is only an amazingly small number of couples that are the same age let alone have a significant birthday in the same month it seems completely unsurprising that one might work later than the other.  

The volatility makes sense and has often been discussed here in the sense that healthy retired 65 year olds with the resources will want to travel, renovate, etc while they can enjoy all that brings.  Less likely to take expensive hiking treks in your 80s (although I know some do).

Silvertabby

Our original plan was to retire at the same time (him 63, me 60) but then he was made a redundancy offer he couldn't refuse at just short of 60.

By then, I had already decided to go part time for my last 3 years or so, so he took over (almost!) all of the housework then we both enjoyed our long weekends.  

Bostonerimus1

Be very very careful with US data. Big differences from the UK will be healthcare and long term care spending. Also US regional variations make such surveys almost meaningless.

Phossy

Bostonerimus1 said:

Be very very careful with US data. Big differences from the UK will be healthcare and long term care spending. Also US regional variations make such surveys almost meaningless.

The healthcare data is broken out in the graph - it's not as significant as I expected.

michaels

Phossy said:

JP Morgan published a report on based on the spending habits analysis of ~ 280,000 Chase households. US based, but I thought it was interesting and probably directionally relevant to the UK too.

Overall they do not see the much talked about 'spending smile', but see a constant decrease in spending over time (nice graph on page 2). Spending does not rise in-line with inflation. They do see a temporary 'surge' in spending as people retire, and this is seen more for households where they are partially retired.

Spending, though on average declining, does have significant volatility and they offer a categorisation of this.

Retirement INSIGHTS: Three new spending surprises 2025

I wonder what the housing spend category covers, it does not seem to decline much from age 40 to retirement - I would have thought UK data would see a big drop as mortgages were paid off.

Bostonerimus1

Phossy said:

Bostonerimus1 said:

Be very very careful with US data. Big differences from the UK will be healthcare and long term care spending. Also US regional variations make such surveys almost meaningless.

The healthcare data is broken out in the graph - it's not as significant as I expected.

They are taking averages and it will vary greatly depending on the type of insurance the retiree has to supplement Medicare...the asset levels of the people in the survey mean that no one will be on Medicaid.

Silvertabby

michaels said:

Phossy said:

JP Morgan published a report on based on the spending habits analysis of ~ 280,000 Chase households. US based, but I thought it was interesting and probably directionally relevant to the UK too.

Overall they do not see the much talked about 'spending smile', but see a constant decrease in spending over time (nice graph on page 2). Spending does not rise in-line with inflation. They do see a temporary 'surge' in spending as people retire, and this is seen more for households where they are partially retired.

Spending, though on average declining, does have significant volatility and they offer a categorisation of this.

Retirement INSIGHTS: Three new spending surprises 2025

I wonder what the housing spend category covers, it does not seem to decline much from age 40 to retirement - I would have thought UK data would see a big drop as mortgages were paid off.

That's what I thought.  Is it the case that fewer Americans buy their own homes, and so have rental costs throughout their retirement?  

Consumer3

@Silvertabby
Half my family are in the US and similar to the UK, the older ones own and the younger ones rent. 

However the difference is although some properties have been owned since the 1950’s, some of them constantly remortgage to pay large medical bills. Taxes on properties are different to UK council tax and vary from state to state. 

Bostonerimus1

Consumer3 said:

@Silvertabby
Half my family are in the US and similar to the UK, the older ones own and the younger ones rent. 

However the difference is although some properties have been owned since the 1950’s, some of them constantly remortgage to pay large medical bills. Taxes on properties are different to UK council tax and vary from state to state. 

The US equivalent of council taxes are real estate taxes and you pay these locally. They vary from town to town. Right now RE taxes are my single largest expense at almost $9k a year. But the amount depends on the value of your property and where you live and the level of services provided by the town.

Silvertabby

Bostonerimus1 said:

Consumer3 said:

@Silvertabby
Half my family are in the US and similar to the UK, the older ones own and the younger ones rent. 

However the difference is although some properties have been owned since the 1950’s, some of them constantly remortgage to pay large medical bills. Taxes on properties are different to UK council tax and vary from state to state. 

The US equivalent of council taxes are real estate taxes and you pay these locally. They vary from town to town. Right now RE taxes are my single largest expense at almost $9k a year. But the amount depends on the value of your property and where you live and the level of services provided by the town.

Assuming you aren't a millionaire living in a mansion, $9K a year is a horrendous amount to pay for anyone, not just a pensioner.  Our 4 bed detached (ok, probably small by US standards but still a decent size) is worth about £400K and our council tax is £2,400 a year.   Hmmm - hope this doesn't put ideas into a certain someone's head !

And, while our NHS isn't perfect, we don't have to constantly remortgage to to keep on top of medical bills.