Generally, people spend less in their later years after retirement, but according to research, this is often not by choice.
Therefore, the question raised by many leading retirement experts about retirement spending is now very relevant. Should advisers reconsider their assumptions when making financial plans?
According to a working paper released by the Center for Retirement Research at Boston College, only a third of the wealthiest Americans change their spending habits when they retire.
After 20 years, compared to the start of retirement, spending can decrease by 12% or more. So, on average, they decrease by 0.7-0.8% every year. The rate of decline is slightly slower for those in the middle and top thirds of wealth, but increases significantly for those with the fewest financial resources.
There is a big diversity in how people live in retirement. Key differentiating factors are financial status, spending habits, demographics and retirement goals, according to a study by the Employee Benefit Research Institute.
Let’s dive into what the general profiles of retirees are