Your expenses decreasing as you age?

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ThankYouJack
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Your expenses decreasing as you age?

Post by ThankYouJack »

I'm curious what decades of your life did you spend the most money? Did your spending decrease after mid-life and into your senior years?
Wannaretireearly
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Re: Your expenses decreasing as you age?

Post by Wannaretireearly »

Interesting topic. I think my 30s. Mortgage + private schools. Hoping 40s are less (much less) so I can retire.
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AnnetteLouisan
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Re: Your expenses decreasing as you age?

Post by AnnetteLouisan »

Absolutely. Spent much more in my 20s and 30s (travel, gyms, spas, clothes, dining). Spend 45k a year now in my 50s because I dont do those things anymore and I own not rent.

What increased were term life insurance and long term care insurance rates, food and housing.
Last edited by AnnetteLouisan on Sun Sep 26, 2021 9:47 am, edited 1 time in total.
SnowBog
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Re: Your expenses decreasing as you age?

Post by SnowBog »

Ignoring taxes, I'm expecting our most expensive years to be early retirement (planned for 53).

We'll have more time for travel/leisure - and respective costs.

Timing likely overlaps with child in college (college costs aren't included, but we might visit them more often, etc.).

We've budgeted for some home remodeling, as we'd have more time to think about/work in these things.

But by far, the higher healthcare costs! Planning on massive costs for a "family" plan until child is on their own. Still expect high costs until we start to transition to Medicare coverage.
JS-Elcano
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Re: Your expenses decreasing as you age?

Post by JS-Elcano »

As I age, my biggest worry is that expenses will be increasing. I worry about potential costs for home health care, assisted living or nursing home care. Without this, planning or retirement would be much easier.
Last edited by JS-Elcano on Fri Sep 24, 2021 7:24 pm, edited 1 time in total.
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ThankYouJack
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Re: Your expenses decreasing as you age?

Post by ThankYouJack »

JS-Elcano wrote: Fri Sep 24, 2021 7:23 pm As I age, my biggest worry is that expenses will be increasing. I worry about potential costs for home health care, assisted living or nursing home care. Without this, planning or retirement would be much easier.
I worried about this too some, but not as much now after reading Die With Zero. Would Long Term Care Insurance help ease your concerns?
JS-Elcano
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Re: Your expenses decreasing as you age?

Post by JS-Elcano »

AnnetteLouisan wrote: Fri Sep 24, 2021 6:55 pm Absolutely. Spent much more in my 20s and 30s (travel, gyms, spas, clothes, dining). Spend 45k a year now in my 50s because I dont do those things anymore and I own not rent.
Exactly the opposite for me. In my 20s and 30s my income was low, much lower than today, and I spent very little money on wants, maybe a weekend car trip a couple of times a year, but no real travel or entertainment to speak of. Now in my late 40s I spend on the house, go out with friends, and travel extensively whenever I have time. Once I retire in ~10 years (at least that's the plan :happy ) I will certainly spend more money on travel while other expenses will probably stay where they are now.
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Artsdoctor
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Re: Your expenses decreasing as you age?

Post by Artsdoctor »

Age-old question. Covid threw the answer out the window but, hopefully, temporarily. Over the past 18 months, spending plummeted because virtually no one traveled. Of course, there were multiple other reasons as well.

Usually, spending ramps up through 50s and 60s, and then it all depends on health. If you're healthy and retired, you can spend an awful lot of money in your 70s. Things slow a bit in the 80s but medical costs are the real wild card. People in their 80s can travel the world but there can also be some dramatic medical costs for some as well. 90s traveling a lot less but money expenditures can really increase with health-related issues.

David Blanchett, I believe, at Morningstar did a lot of great work on this: the smile curve with costs being high early in retirement, then falling, then increasing.

Educations can also be the wild card but if you have kids and grandkids, the costs may never go away (or not).
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Re: Your expenses decreasing as you age?

Post by SnowBog »

ThankYouJack wrote: Fri Sep 24, 2021 7:28 pm
JS-Elcano wrote: Fri Sep 24, 2021 7:23 pm As I age, my biggest worry is that expenses will be increasing. I worry about potential costs for home health care, assisted living or nursing home care. Without this, planning or retirement would be much easier.
I worried about this too some, but not as much now after reading Die With Zero. Would Long Term Care Insurance help ease your concerns?
No! The threads I've seen on LTC scare me more... People paying premiums for years for a future benefit they never receive, when their insurer goes out of business or the premiums are increased to the point they are no longer affordable.

But I've also realized that my non-LTC expenses may be near $0 if I need LTC. So it's not like LTC is a purely "additive" cost.
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Re: Your expenses decreasing as you age?

Post by JS-Elcano »

ThankYouJack wrote: Fri Sep 24, 2021 7:28 pm
JS-Elcano wrote: Fri Sep 24, 2021 7:23 pm As I age, my biggest worry is that expenses will be increasing. I worry about potential costs for home health care, assisted living or nursing home care. Without this, planning or retirement would be much easier.
I worried about this too some, but not as much now after reading Die With Zero. Would Long Term Care Insurance help ease your concerns?
I will check this out! Thanks for the tip!

As for LTCi, I might start looking into it as I get older. The problem is that they don't cover the worst case scenario of needing many years of care. If I need just a few years (<5) then I can cover it, but beyond that could be problematic. I am single and plan to sell my house to cover expenses of assisted living or nursing home care. I am thinking about a CCRC. It's the uncertainty and the endless options and the wide range of quality (or lack thereof) in the facilities that makes me feel uneasy about planning for that stage of my live.
student
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Re: Your expenses decreasing as you age?

Post by student »

I only started spending money on nicer things in my mid-40's.
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Re: Your expenses decreasing as you age?

Post by jebmke »

50s; we traveled a lot before we retired. Now, not so much. Taxes were a lot higher due to earned income.

Once RMDs kick in, 70s will take the lead.
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JS-Elcano
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Re: Your expenses decreasing as you age?

Post by JS-Elcano »

SnowBog wrote: Fri Sep 24, 2021 7:37 pm
ThankYouJack wrote: Fri Sep 24, 2021 7:28 pm
JS-Elcano wrote: Fri Sep 24, 2021 7:23 pm As I age, my biggest worry is that expenses will be increasing. I worry about potential costs for home health care, assisted living or nursing home care. Without this, planning or retirement would be much easier.
I worried about this too some, but not as much now after reading Die With Zero. Would Long Term Care Insurance help ease your concerns?
No! The threads I've seen on LTC scare me more... People paying premiums for years for a future benefit they never receive, when their insurer goes out of business or the premiums are increased to the point they are no longer affordable.

But I've also realized that my non-LTC expenses may be near $0 if I need LTC. So it's not like LTC is a purely "additive" cost.
Good points. That's similar to my thinking about the LTC issue, too. The policies are inadequate now and things will likely only get worse. High premiums are increasing all the time and people keep reducing their coverage just to keep premiums affordable. And after all this it just covers 36 months. Some European countries have LTCi as part of their payroll taxes that people pay throughout their lifetime and this then covers LTC in old age should the need arise. This takes a lot o the worry out of it (though it doesn't seem to be the perfect solution either from what I hear).
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Re: Your expenses decreasing as you age?

Post by JS-Elcano »

student wrote: Fri Sep 24, 2021 7:45 pm I only started spending money on nicer things in my mid-40's.
Ditto.
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ResearchMed
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Re: Your expenses decreasing as you age?

Post by ResearchMed »

Artsdoctor wrote: Fri Sep 24, 2021 7:36 pm Age-old question. Covid threw the answer out the window but, hopefully, temporarily. Over the past 18 months, spending plummeted because virtually no one traveled. Of course, there were multiple other reasons as well.

Usually, spending ramps up through 50s and 60s, and then it all depends on health. If you're healthy and retired, you can spend an awful lot of money in your 70s. Things slow a bit in the 80s but medical costs are the real wild card. People in their 80s can travel the world but there can also be some dramatic medical costs for some as well. 90s traveling a lot less but money expenditures can really increase with health-related issues.

David Blanchett, I believe, at Morningstar did a lot of great work on this: the smile curve with costs being high early in retirement, then falling, then increasing.

Educations can also be the wild card but if you have kids and grandkids, the costs may never go away (or not).
Ignoring The Plague Years (if that's even possible), it seems that our smile might be closer to a horizontal line, probably with a blip up at the end (until Hemlock time). (The past two years, our spending has plummeted, but hopefully at some point we'll be able to make up for lost time.)

DH will retire very late by choice, but we agreed that we'd "start the traveling" sooner... so those relatively large expenses started a few years ago.
We had also planned to downsize, but now that we are at home 24/7, we are glad we still have the space.

Once we can, we plan to resume the travel, on whatever basis works for us.
And where that smile might have dipped down, the "slow go" years, we hope to continue traveling, albeit with help if needed. So we might bring family along more, and take fewer, but more expensive, trips. We've even thought about, if necessary, bringing a third person along to help, if it were to come to that or not traveling anymore.

It's very difficult to think about some of those plans these days, as everything seems so uncertain, and especially with travel.
We finally made a reservation for a nice trip in December, and it's looking like we won't be able to take that trip after all.
So we'll make reservations for a later date, and keep hoping...

I sure hope we'll be able to "start spending more" again!

RM
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Re: Your expenses decreasing as you age?

Post by iamblessed »

Artsdoctor wrote: Fri Sep 24, 2021 7:36 pm Age-old question. Covid threw the answer out the window but, hopefully, temporarily. Over the past 18 months, spending plummeted because virtually no one traveled. Of course, there were multiple other reasons as well.

Usually, spending ramps up through 50s and 60s, and then it all depends on health. If you're healthy and retired, you can spend an awful lot of money in your 70s. Things slow a bit in the 80s but medical costs are the real wild card. People in their 80s can travel the world but there can also be some dramatic medical costs for some as well. 90s traveling a lot less but money expenditures can really increase with health-related issues.

David Blanchett, I believe, at Morningstar did a lot of great work on this: the smile curve with costs being high early in retirement, then falling, then increasing.

Educations can also be the wild card but if you have kids and grandkids, the costs may never go away (or not).
This is just from what I see. People are done traveling by 80. People are slowing down travel in the 70's. Before 70 they can travel a lot.
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Re: Your expenses decreasing as you age?

Post by Bogle7 »

Ages 72/63.
No.
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hoofaman
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Re: Your expenses decreasing as you age?

Post by hoofaman »

It depends on the hand you are delt, some of your kids or parents might need financial support, you may have a health issue, you may get sued, or you may get divorced

I don’t think personal expenses alone create issues for most people, that’s easy to control and a known quantity
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Re: Your expenses decreasing as you age?

Post by sailaway »

iamblessed wrote: Fri Sep 24, 2021 9:33 pm
Artsdoctor wrote: Fri Sep 24, 2021 7:36 pm Age-old question. Covid threw the answer out the window but, hopefully, temporarily. Over the past 18 months, spending plummeted because virtually no one traveled. Of course, there were multiple other reasons as well.

Usually, spending ramps up through 50s and 60s, and then it all depends on health. If you're healthy and retired, you can spend an awful lot of money in your 70s. Things slow a bit in the 80s but medical costs are the real wild card. People in their 80s can travel the world but there can also be some dramatic medical costs for some as well. 90s traveling a lot less but money expenditures can really increase with health-related issues.

David Blanchett, I believe, at Morningstar did a lot of great work on this: the smile curve with costs being high early in retirement, then falling, then increasing.

Educations can also be the wild card but if you have kids and grandkids, the costs may never go away (or not).
This is just from what I see. People are done traveling by 80. People are slowing down travel in the 70's. Before 70 they can travel a lot.
No one told most of the people I know this. I know a lot of people who went camping until their 60s or 70s and switched to more expensive forms of travel, like cruises, as they aged. My uncle went from motorcycle trips to a small truck camper to a large class A, but he did sell the boat in there somewhere, so it may come out the same.

There have been some studies to show that people spend less as they age because they feel they are running out of money, rather than due to slowing down as they age. But some people do become more homebody as soon as the first ailment sets in or when they have grandchildren close by.
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Re: Your expenses decreasing as you age?

Post by dbr »

I would say I have seen three things:

1. Children are expensive and the older they get until they actually have jobs the more expensive they are.

2. Elder care can be very expensive at the end, but may not last very long.

3. Whenever you have more money you spend more money. That is probably more the older you get. If you don't spend the money on yourself you may become more generous with gifts.

There is also:

0. Divorce is very expensive. Fortunately I have only seen it and not done it.
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Re: Your expenses decreasing as you age?

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iamblessed wrote: Fri Sep 24, 2021 9:33 pm
Artsdoctor wrote: Fri Sep 24, 2021 7:36 pm Age-old question. Covid threw the answer out the window but, hopefully, temporarily. Over the past 18 months, spending plummeted because virtually no one traveled. Of course, there were multiple other reasons as well.

Usually, spending ramps up through 50s and 60s, and then it all depends on health. If you're healthy and retired, you can spend an awful lot of money in your 70s. Things slow a bit in the 80s but medical costs are the real wild card. People in their 80s can travel the world but there can also be some dramatic medical costs for some as well. 90s traveling a lot less but money expenditures can really increase with health-related issues.

David Blanchett, I believe, at Morningstar did a lot of great work on this: the smile curve with costs being high early in retirement, then falling, then increasing.

Educations can also be the wild card but if you have kids and grandkids, the costs may never go away (or not).
This is just from what I see. People are done traveling by 80. People are slowing down travel in the 70's. Before 70 they can travel a lot.
Make that "... SOME people..." :!:

We didn't even get started with our "real travel" until approx 70, and as we approached mid/late 70's, we were spending the same or a bit more each year (until the pandemic hit, and now we are just saving to spend that plus more whenever we *can* travel again).
And there are plenty of others of similar or older ages who are in the even more expensive suites on the nice cruise ships. Many of them seem to take *lots* of cruises each year.

On CruiseCritic, one can read about cruises that make it easy/easier to have "dialysis at sea", etc.
All sorts of rental assistance devices can be waiting in one's cabin or suite, including full hospital beds if requested. There are cabins and suites that are "accessible" - usually no thresholds in the doorways and a wheel-in shower, etc.
Hotels tend to have the same available.

And some bring along an aide.
Much of that can cost more, not less.
But mostly, it means that one doesn't necessarily need to cut back or stop traveling as one ages or has medical ailments.
(Sure, not all trips are equally 'do-able under those circumstances', but there are many that remain!)

Indeed, I now can't always keep up. So we have private tours, so we can rest whenever we wish, and don't have to worry about the "others". But we prefer that anyway, as we can spend "more time here and less time there", or change an itinerary almost completely.
Or DH will go on some strenuous excursion, or part of one, while I wait.

We just make sure we have adequate travel insurance (and we've had several claims, so thank goodness for that coverage).

RM
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Re: Your expenses decreasing as you age?

Post by Brianmcg321 »

Mine are because I'm paying off everything. My daughters college, our house etc. If I put up some solar panels on my roof my only bills will be food and cable.
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Re: Your expenses decreasing as you age?

Post by iamblessed »

ResearchMed wrote: Fri Sep 24, 2021 10:02 pm
iamblessed wrote: Fri Sep 24, 2021 9:33 pm
Artsdoctor wrote: Fri Sep 24, 2021 7:36 pm Age-old question. Covid threw the answer out the window but, hopefully, temporarily. Over the past 18 months, spending plummeted because virtually no one traveled. Of course, there were multiple other reasons as well.

Usually, spending ramps up through 50s and 60s, and then it all depends on health. If you're healthy and retired, you can spend an awful lot of money in your 70s. Things slow a bit in the 80s but medical costs are the real wild card. People in their 80s can travel the world but there can also be some dramatic medical costs for some as well. 90s traveling a lot less but money expenditures can really increase with health-related issues.

David Blanchett, I believe, at Morningstar did a lot of great work on this: the smile curve with costs being high early in retirement, then falling, then increasing.

Educations can also be the wild card but if you have kids and grandkids, the costs may never go away (or not).
This is just from what I see. People are done traveling by 80. People are slowing down travel in the 70's. Before 70 they can travel a lot.
Make that "... SOME people..." :!:

Make that most people.
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Re: Your expenses decreasing as you age?

Post by jebmke »

In my group of acquaintances, many in late 70s and 80s are still going strong and traveling a lot - even more than me. Not even 70, I am an exception - not due to age but due to having traveled so much in earlier decades, it isn't that appealing to me any more. A friend of mine just turned 95. He started his 9th book (writing) and will return to Paris next summer which was his annual sojourn until the pandemic hit.
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Re: Your expenses decreasing as you age?

Post by jebmke »

dbr wrote: Fri Sep 24, 2021 10:01 pm 1. Children are expensive and the older they get until they actually have jobs the more expensive they are.
Grandchildren too, apparently based on anecdotes from friends.
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Re: Your expenses decreasing as you age?

Post by SQRT »

Spent most early in retirement. Bought 2 more homes, expensive travel, etc. Now retired for 15 years, 71 years old, and big project is rebuilding one of our homes. I expect spending might decrease in my ‘80s? Not sure though. Healthcare not much of a concern since we are Canadians.
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Re: Your expenses decreasing as you age?

Post by carolinaman »

ThankYouJack wrote: Fri Sep 24, 2021 6:49 pm I'm curious what decades of your life did you spend the most money? Did your spending decrease after mid-life and into your senior years?
We spent the most money when our kids were in their teens and in college. I did pay as you go for our daughter's college education and she got married the summer after graduation. That was definitely the high water mark for expenses. We are in 70s and retired 11 years. Our expenses have dropped as we have aged. The wild card is medical expenses. I have had a rough year with medical issues but the combination of Medicare and my company paid supplement have covered almost everything. However, I think that a serious illness with expensive drugs could far exceed expenses in earlier decades depending upon your insurance coverage. We have been blessed so far.

We did spend a lot on remodeling our home shortly after retirement but that should probably not be count in annual expenses since most of the funding came from savings and could arguably be considered capital improvements.
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Re: Your expenses decreasing as you age?

Post by scrabbler1 »

Excluding taxes and paying down/off debt, and not adjusting for inflation, my expenses have been pretty stable over time. They have risen slightly in the last few years due to health insurance rates rising. I fixed that problem in 2020 by adjusting my portfolio to get back on the ACA subsidy train, though.
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Re: Your expenses decreasing as you age?

Post by jharkin »

JS-Elcano wrote: Fri Sep 24, 2021 7:33 pm
AnnetteLouisan wrote: Fri Sep 24, 2021 6:55 pm Absolutely. Spent much more in my 20s and 30s (travel, gyms, spas, clothes, dining). Spend 45k a year now in my 50s because I dont do those things anymore and I own not rent.
Exactly the opposite for me. In my 20s and 30s my income was low, much lower than today, and I spent very little money on wants, maybe a weekend car trip a couple of times a year, but no real travel or entertainment to speak of. Now in my late 40s I spend on the house, go out with friends, and travel extensively whenever I have time. Once I retire in ~10 years (at least that's the plan :happy ) I will certainly spend more money on travel while other expenses will probably stay where they are now.

+1 I think the high spending 30s only works for professionals in careers that start high like medicine /law/finance. Right out of school in my 20s I could barely afford rent+student loans but mid 40s I make 4x and spend far more.

I expect peak spending to hit in my 50s as I put the kids through college and then decline steeply once that’s done and the house is finally paid off.
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Re: Your expenses decreasing as you age?

Post by Wanderingwheelz »

jharkin wrote: Sun Sep 26, 2021 8:15 am
JS-Elcano wrote: Fri Sep 24, 2021 7:33 pm
AnnetteLouisan wrote: Fri Sep 24, 2021 6:55 pm Absolutely. Spent much more in my 20s and 30s (travel, gyms, spas, clothes, dining). Spend 45k a year now in my 50s because I dont do those things anymore and I own not rent.
Exactly the opposite for me. In my 20s and 30s my income was low, much lower than today, and I spent very little money on wants, maybe a weekend car trip a couple of times a year, but no real travel or entertainment to speak of. Now in my late 40s I spend on the house, go out with friends, and travel extensively whenever I have time. Once I retire in ~10 years (at least that's the plan :happy ) I will certainly spend more money on travel while other expenses will probably stay where they are now.

+1 I think the high spending 30s only works for professionals in careers that start high like medicine /law/finance. Right out of school in my 20s I could barely afford rent+student loans but mid 40s I make 4x and spend far more.

I expect peak spending to hit in my 50s as I put the kids through college and then decline steeply once that’s done and the house is finally paid off.
That’s what I’ve found to be the case. I’m 50 now, but the kid is finished college and out on her own, so at the point in life where I have no large expense. I’ve also changed my views on consumption, trying to live with as small an impact on the planet as I reasonably can. I’m spending less now than I ever have and I think I’m happier than ever, too.
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Re: Your expenses decreasing as you age?

Post by Sandtrap »

I'm curious what decades of your life did you spend the most money? Did your spending decrease after mid-life and into your senior years?
Average annual expenses per "stage of life" are highly dependent on career, family dynamics, health, and changing priorities, as well as effectiveness of a long term financial strategy. And, how much is available to spend at each stage of life.
IE: if you are in the "yearning years" there might not be much to spend.

Actionable Solutions: (for the OP and others with these concerns)

1. Have more assets and cash than you can spend at any given time.
2. Focus on earning and saving and investing vs spending.
3. Frugality as a lifestyle and personal ethos.
4. Health (this will sink a ship and is completely unpredictable).
5. Family dynamics (this will sink a ship and is completely, sort of, unpredictable).

j :D
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TheNightsToCome
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Re: Your expenses decreasing as you age?

Post by TheNightsToCome »

SnowBog wrote: Fri Sep 24, 2021 7:37 pm
ThankYouJack wrote: Fri Sep 24, 2021 7:28 pm
JS-Elcano wrote: Fri Sep 24, 2021 7:23 pm As I age, my biggest worry is that expenses will be increasing. I worry about potential costs for home health care, assisted living or nursing home care. Without this, planning or retirement would be much easier.
I worried about this too some, but not as much now after reading Die With Zero. Would Long Term Care Insurance help ease your concerns?
But I've also realized that my non-LTC expenses may be near $0 if I need LTC. So it's not like LTC is a purely "additive" cost.
But LTC will be an added cost if one spouse incurs the expense while the other remains healthy and independent, correct? My wife is 11 years younger than me, and I want to make sure we have plenty to handle that potential scenario.
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Re: Your expenses decreasing as you age?

Post by TheNightsToCome »

sailaway wrote: Fri Sep 24, 2021 9:44 pm
iamblessed wrote: Fri Sep 24, 2021 9:33 pm
Artsdoctor wrote: Fri Sep 24, 2021 7:36 pm Age-old question. Covid threw the answer out the window but, hopefully, temporarily. Over the past 18 months, spending plummeted because virtually no one traveled. Of course, there were multiple other reasons as well.

Usually, spending ramps up through 50s and 60s, and then it all depends on health. If you're healthy and retired, you can spend an awful lot of money in your 70s. Things slow a bit in the 80s but medical costs are the real wild card. People in their 80s can travel the world but there can also be some dramatic medical costs for some as well. 90s traveling a lot less but money expenditures can really increase with health-related issues.

David Blanchett, I believe, at Morningstar did a lot of great work on this: the smile curve with costs being high early in retirement, then falling, then increasing.

Educations can also be the wild card but if you have kids and grandkids, the costs may never go away (or not).
This is just from what I see. People are done traveling by 80. People are slowing down travel in the 70's. Before 70 they can travel a lot.
There have been some studies to show that people spend less as they age because they feel they are running out of money, rather than due to slowing down as they age.
I've always assumed financial resources and/or worry about resources accounted for the smile. I'm confident that retirees would increase spending if income/wealth continued to rise throughout old age. One doesn't need to travel to spend money.
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Re: Your expenses decreasing as you age?

Post by TheNightsToCome »

SQRT wrote: Sat Sep 25, 2021 9:32 am Spent most early in retirement. Bought 2 more homes, expensive travel, etc. Now retired for 15 years, 71 years old, and big project is rebuilding one of our homes. I expect spending might decrease in my ‘80s? Not sure though. Healthcare not much of a concern since we are Canadians.
Is there a significant difference in healthcare expenses between US and Canada after age 65 (i.e., Medicare age)?
dbr
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Re: Your expenses decreasing as you age?

Post by dbr »

TheNightsToCome wrote: Sun Sep 26, 2021 8:55 am
sailaway wrote: Fri Sep 24, 2021 9:44 pm
iamblessed wrote: Fri Sep 24, 2021 9:33 pm
Artsdoctor wrote: Fri Sep 24, 2021 7:36 pm Age-old question. Covid threw the answer out the window but, hopefully, temporarily. Over the past 18 months, spending plummeted because virtually no one traveled. Of course, there were multiple other reasons as well.

Usually, spending ramps up through 50s and 60s, and then it all depends on health. If you're healthy and retired, you can spend an awful lot of money in your 70s. Things slow a bit in the 80s but medical costs are the real wild card. People in their 80s can travel the world but there can also be some dramatic medical costs for some as well. 90s traveling a lot less but money expenditures can really increase with health-related issues.

David Blanchett, I believe, at Morningstar did a lot of great work on this: the smile curve with costs being high early in retirement, then falling, then increasing.

Educations can also be the wild card but if you have kids and grandkids, the costs may never go away (or not).
This is just from what I see. People are done traveling by 80. People are slowing down travel in the 70's. Before 70 they can travel a lot.
There have been some studies to show that people spend less as they age because they feel they are running out of money, rather than due to slowing down as they age.
I've always assumed financial resources and/or worry about resources accounted for the smile. I'm confident that retirees would increase spending if income/wealth continued to rise throughout old age. One doesn't need to travel to spend money.
It certainly seems to me the question of spending cannot be separated from both having money to spend and not having money to spend. The former might also be related to the "expense" of giving money away when there is more than enough.
SQRT
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Re: Your expenses decreasing as you age?

Post by SQRT »

TheNightsToCome wrote: Sun Sep 26, 2021 9:01 am
SQRT wrote: Sat Sep 25, 2021 9:32 am Spent most early in retirement. Bought 2 more homes, expensive travel, etc. Now retired for 15 years, 71 years old, and big project is rebuilding one of our homes. I expect spending might decrease in my ‘80s? Not sure though. Healthcare not much of a concern since we are Canadians.
Is there a significant difference in healthcare expenses between US and Canada after age 65 (i.e., Medicare age)?
Probably not. I forgot about your Medicare. LTC expenses are an issue in both countries. But we can easily absorb those costs as well as I figure our discretionary expenses would be virtually nil if we are spending on LTC.
dukeblue219
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Re: Your expenses decreasing as you age?

Post by dukeblue219 »

I expect our late 20s to early 30s to be peak spending. Spouse and I were both fully employed and had time for discretionary spending, put a big dow payment on a house, and then once we had kids spending on them shot way up. Once they're into public school that will come down substantially and we only have 1.5 jobs now (and no free time) so spending is limited as well.
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Re: Your expenses decreasing as you age?

Post by UpperNwGuy »

I spent the most money during the decade and a half when my three kids were in college. No other decade came close.
SQRT
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Re: Your expenses decreasing as you age?

Post by SQRT »

dbr wrote: Sun Sep 26, 2021 9:02 am
It certainly seems to me the question of spending cannot be separated from both having money to spend and not having money to spend. The former might also be related to the "expense" of giving money away when there is more than enough.
Yes. This is a point that is often ignored here. Ie spending is often discussed in isolation of means. Many people here seem to have a set spending level that isn’t effected by means, at least on the upside.

When I retired 15 years ago I found that my means could support spending at a much higher level than I had expected. So I upped our spending. This increase in means has continued since then thanks to excellent markets.

So the big question remains. Will your spending decrease as you age? If markets decline I will very likely reduce spending. If I get to the point where travel is less enjoyable or the burden of owning multiple homes gets too great, I suspect we will reduce spending. If this causes our portfolio to increase to unreasonable levels it will be charitable and other giving that will increase.
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Re: Your expenses decreasing as you age?

Post by nisiprius »

I have great skepticism about the "retirement spending smile" theory. If it even is valid, I suspect it is something that shows up only in averages of large numbers of people. Thus it be appropriate for public policy planning, but irrelevant to an individual's retirement planning.

One reason I doubt it is that, as the Church Lady used to say in the comedy routine, it is "verrrry conveeeeeeenient!" It makes awkward issues like "the 4% rule, I mean the 3.71% rule, I mean the 3.38% rule" stuff come out much better. When Ray Lucia got into trouble for making unrealistic claims for his "buckets of money" withdrawal strategy--(he claimed it had been rigorously backtested but couldn't produce any documentation of the backtests)--he actually made an explicit excuse based on the "new studies" that showed retirement spending decreases with age.

There are many subtle ways in which out-of-pocket healthcare spending increases. I sometimes feel that I can measure my life by the number of shelves in CVS I've had to buy something from. Perhaps my life will be over when I have bought something from every shelf.

Apart from visible health-related expenses (warning, anecdotes ahead) we, and most retirees I know, find that we are ramping up spending if we can, to accommodate the normal small infirmities and debilities of advancing age. For example, the last time we bought a new car, we could only get the full NHTSA "recommended safety technology" package (pre-collision detect, lane departure alert, blind spot monitors, rear camera, etc.) in the highest trim package, so that's what we bought. The last vacation we took, we flew first class because "we're too old for" economy class. We're about ready to hire a landscaping service for the first time in our lives; I don't think Medicare will pay for that!

In addition to falling in the grey area between "need" and "want," between "necessity" and "luxury," these things are unpredictable for retirement planning. I'd like to see some sampling error bounds on (e.g.) Blanchett's charts. I suspect that it's not unusual for people to make it from age 65 to age 85, without sustaining any financial shocks due to "general aging" that can't be met from the "emergency fund." But that it is not unusual to encounter disruptive expenses for things that are "almost needed."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: Your expenses decreasing as you age?

Post by dbr »

nisiprius wrote: Sun Sep 26, 2021 9:45 am
Apart from visible health-related expenses (warning, anecdotes ahead) we, and most retirees I know, find that we are ramping up spending if we can, to accommodate the normal small infirmities and debilities of advancing age. For example, the last time we bought a new car, we could only get the full NHTSA "recommended safety technology" package (pre-collision detect, lane departure alert, blind spot monitors, rear camera, etc.) in the highest trim package, so that's what we bought. The last vacation we took, we flew first class because "we're too old for" economy class. We're about ready to hire a landscaping service for the first time in our lives; I don't think Medicare will pay for that!
I'm not sure about the first class seat, but the first thing I did when I retired was hire a lawn care service and a snow removal service because those were two millstones around my neck I was not going to have in retirement. This is in spite of having more time to do the work . Also when car replacement time came the top trim level selection was kind of a no brainer. We have tended to upscale our lodging selections when travelling, however. We also paid a pretty large pile of cash for a thorough repaint of the house exterior that I had done myself in previous iterations. I don't need to make the effort nor teeter on ladders a death fall away from the ground (Well, maybe not death, but a good friend broke his back in a fall while trying to clear debris from his roof.).
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Re: Your expenses decreasing as you age?

Post by invest4 »

UpperNwGuy wrote: Sun Sep 26, 2021 9:16 am I spent the most money during the decade and a half when my three kids were in college. No other decade came close.
dbr wrote: Fri Sep 24, 2021 10:01 pm I would say I have seen three things:
1. Children are expensive and the older they get until they actually have jobs the more expensive they are.
carolinaman wrote: Sat Sep 25, 2021 9:37 am We spent the most money when our kids were in their teens and in college.
jharkin wrote: Sun Sep 26, 2021 8:15 am I expect peak spending to hit in my 50s as I put the kids through college and then decline steeply once that’s done and the house is finally paid off.
This has certainly been my experience thus far...currently in the middle of it (age 48).
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Re: Your expenses decreasing as you age?

Post by JVT »

dukeblue219 wrote: Sun Sep 26, 2021 9:13 am I expect our late 20s to early 30s to be peak spending. Spouse and I were both fully employed and had time for discretionary spending, put a big dow payment on a house, and then once we had kids spending on them shot way up. Once they're into public school that will come down substantially and we only have 1.5 jobs now (and no free time) so spending is limited as well.
Depending on the area the savings from kids starting public school may be less than you initially think if you are still paying for before/after care and summer camps. In the Northern Virginia area we went from ~16k for preschool to 6k before/after this fall and its looking like 4-5k in summer camps. Dropping by a third is nice, but its not like the cost goes away if you are both back to working full time. At this point I am assuming those costs never really go away and just shift into other activity fees as kids get older.
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Re: Your expenses decreasing as you age?

Post by namajones »

ThankYouJack wrote: Fri Sep 24, 2021 6:49 pm I'm curious what decades of your life did you spend the most money? Did your spending decrease after mid-life and into your senior years?
30s and 40s. Mostly 40s.
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Re: Your expenses decreasing as you age?

Post by Mr. Rumples »

They are not decreasing, just changing into health related items: dental implants, hearing aids &c. Some home maintenance items I would have once done, now have to be paid for: painting the house, cleaning the gutters and I might need to hire someone to help clean soon - once I get down, I have trouble getting up. I already pay to have help in the yard every week.
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Re: Your expenses decreasing as you age?

Post by dukeblue219 »

JVT wrote: Sun Sep 26, 2021 11:51 am
dukeblue219 wrote: Sun Sep 26, 2021 9:13 am I expect our late 20s to early 30s to be peak spending. Spouse and I were both fully employed and had time for discretionary spending, put a big dow payment on a house, and then once we had kids spending on them shot way up. Once they're into public school that will come down substantially and we only have 1.5 jobs now (and no free time) so spending is limited as well.
Depending on the area the savings from kids starting public school may be less than you initially think if you are still paying for before/after care and summer camps. In the Northern Virginia area we went from ~16k for preschool to 6k before/after this fall and its looking like 4-5k in summer camps. Dropping by a third is nice, but its not like the cost goes away if you are both back to working full time. At this point I am assuming those costs never really go away and just shift into other activity fees as kids get older.
Yeah, I know it won't be all savings, but part of that "1.5 jobs" is so that we don't need before/after care and only minimal summer care (i.e. camps the kids want, not care we need).
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Re: Your expenses decreasing as you age?

Post by SnowBog »

TheNightsToCome wrote: Sun Sep 26, 2021 8:47 am
SnowBog wrote: Fri Sep 24, 2021 7:37 pm
ThankYouJack wrote: Fri Sep 24, 2021 7:28 pm
JS-Elcano wrote: Fri Sep 24, 2021 7:23 pm As I age, my biggest worry is that expenses will be increasing. I worry about potential costs for home health care, assisted living or nursing home care. Without this, planning or retirement would be much easier.
I worried about this too some, but not as much now after reading Die With Zero. Would Long Term Care Insurance help ease your concerns?
But I've also realized that my non-LTC expenses may be near $0 if I need LTC. So it's not like LTC is a purely "additive" cost.
But LTC will be an added cost if one spouse incurs the expense while the other remains healthy and independent, correct? My wife is 11 years younger than me, and I want to make sure we have plenty to handle that potential scenario.
My point is that there may be some offsetting costs. Obviously how much is dependent on what you currently spend, and circumstances like if you are married, etc.

But let's say you end up in LTC. Likely you aren't going to have any other food, travel, auto, entertainment, etc. costs - just the LTC costs.

Presumably your spouse would still have costs like home/auto/insurance. But assuming the LTC is nearby, they likely have reduced travel, entertainment, etc. costs as they'd presumably be spending time with you.

So some of the cost of LTC is offset by other expenses that are reduced because you are in LTC. Again, how much is highly variable to each person and their circumstances.
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