39% of retirees are spending more than they expected
Posted on February 7, 2019
That’s troubling news if you are retired or actively planning for retirement in the next several years, agree Teipen Selanders Poynter & Ayres CPAs. According to the Global Atlantic Retirement Spending Study: Perception vs. Reality, (LINK: https://www.globalatlantic.com/retirement-survey) a full 39% of retirees are spending more in retirement than they had anticipated.
The study’s findings are based on an Echo Research survey of 4,223 people age 40 and older, conducted in September 2018, showing:
- A typical non-retired U.S. consumer over the age of 40 spends an average of $2,993 a month
- Retirees spend 32% less ($2,008), including:
- entertainment (29% less)
- dining out (24% less)
- traveling (18% less) and
- housing (23% less).
- Retirees with a pension spend 39% more than those without ($2,379 vs. $1,709), and 20.5% less than pre-retirees.
- Retirees with an annuity spend 37% more than retirees without an annuity ($2,545 vs. $1,850) and 17.6% less than pre-retirees (generally on rent, dining out and recreation).
- Asked to rate the importance of income to pay for basic living expenses in retirement on a 10-point scale, 56% of non-retirees give it a 9.
- 66% think they are on track to generate enough income to meet basic needs in retirement.
It is a good thing to know in advance of actual retirement how to plan better and more accurately, for what’s ahead. With this in mind, Echo Research asked retirees what their top three financial regrets are. They said:
- 36% said not saving enough
- 20% said relying too much on Social Security
- 12% said not paying down debt before retiring.
Most Americans, it seems, are adept at adjusting their lifestyles and cutting spending once they see how quickly costs add up in retirement. Interestingly, 49% of pre-retirees are seeing the writing on the wall, believing that planning for retirement is more difficult for them than it was for their parents.
If you are actively planning for your retirement, let your CPA know. We can help you paint a realistic picture of what lies ahead and how to better prepare.