The Retirement Spending Myth

People who are expecting to retire a few years from now may have their own concerns about this change. But along with such changes, upcoming retirees should be able to know what to expect. It is also important that they have an idea of what their life would be upon retirement. And just as important, they should also have an idea of some of those retirement myths that may have given other retirees the wrong idea about retirement. One of the most important probably has to do with retirement spending.

Retirement= Less Spending

There is this general assumption that retirement brings about a considerable reduction in spending and expenses. There are a number of so-called experts that generally believe spending goes down at retirement. But it can also be a myth.

People who retire do not necessarily enjoy a reduction in their spending, especially during their first or second year of retirement life. The reason why a number of people believe in this is because leaving a life of work also brings with it doing away with those expenses associated with it. No longer will the retired be obliged to spend for gas going to and from work daily. There’s no more need to buy office clothes or take those lunches in restaurants during lunch breaks. Even that cellphone bill may have the need for a downgrade. But the savings that these expenses offer may be able to accurately paint the whole picture of retirement life.

Retirement=Freedom + Costs

This equation can also be true for many retirees. Retirement, for a lot of people, may also be equated with freedom. It means that retirement provides people with time to do what they have long wanted to do in life. It gives them the freedom finally to enjoy the fruits of their labor all these years. Such a perspective of retirement can usually lead to some added spending.

The freedom that a retiree feels on the first year or two of retirement life can be quite exciting. It can make them try to make the first retirement years more meaningful. Making that first trip to Europe, finally getting a golf membership, buying an RV to go on cross country trips, taking a long dream cruise to paradise, even getting a new hobby- all these can cost a lot. They become added expenses that can also eat up a chunk of one’s retirement fund.

Retirement= Higher Healthcare Costs

Retirement also brings with it concerns about one’s health. As one age, there might be conditions that retirees have to increasingly deal with. If the retiree hasn’t invested well on health while still young, the healthcare costs that come with age will surely shoot up. And with the increasing cost of health care, retirees should expect a good share of their retirement fund to be spent on it.

Don’t Believe The Myth

To say that spending for retirement will considerably lessen is a myth that upcoming retirees should try not to buy into. They should try to prepare without trying to buy into such assumptions that many retirees commonly hear and only regret later on. What one can do is to try and plan a better retirement. This includes having a good idea of what to do, how money is to be spent as well as how available funds can be stretched out further during retirement. Having this plan would make it easier for people to ease into a more comfortable retirement.

 

Posted by Ardent Editor on Jan 12 2012 in Financial Planning Tags: , , , ,

  • Sponsors