Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 79

Reader question about life after 75

John sent this fascinating question to our mailbox last week. We'd love to provide him with some answers. Please comment if you can.

"Everybody seems to ponder the question, do i have enough $$ to see us through.

I am 68, my wife 69 and we have no liabilities, no children to leave anything to ... so we spend, not over the top but I often wonder would I spend the same amount of $$ in 10 years time when (and if) I make it to 78. Would we go out as much as we do now, would we travel as much (tiring a bit now of the long haul to Europe and the US).

It would be interesting to hear from some of your readers who are now in their late 70s or early 80s … what is their experience in the matters i have raised?"

 

9 Comments
Andrew Bloore
September 19, 2014

Having spent many years as an administrator of SMSF's the trend I have observed over 25 years of doing this, is, that people for the first 5 years after retirement spend 20% more money than the year before their retirement (holidays, new clothes, new car more dinners out etc) then it reduces back to about the same as the pre retirement year and progressively increases with CPI. What its spent on changes over time but generally not the quantum. I know this is a generalisation and as such it is an "averages" result to a question for a specific individual.

Rob Gould
September 16, 2014

John
I have been advising clients for many years and there are two things that are apparent.
First the generation that is now 70+ is perhaps more thrifty and as they get older seem to focus on saving even more. I do not understand it but it is a very common theme.
Second as activity reduces so does spending. This activity reduction is simply due to age, energy level and health, which I have seen happen to all my clients ( +40 clients) as they move through their 70's and 80's. The problem is each has their own time for this to occur.

However, a critical extra cost that is now arising is what age care do you want if it becomes necessary, as the cost varies by level and to some extent quality of the care and accommodation.

I am always suggesting to my clients to enjoy themselves along the journey as I have seen ill health or unexpected events stop future plans. So as long as you know what life you what later then enjoy it now as well.

John Rogers
September 13, 2014

Thank you for your responses to my question and i had a chuckle at John (sholl) wistful remark on hospitals and cruise liners ...but after hearing today of the death of Nicole Kidmans Dad who seem to very fit i am inclined to press on spending and worry about it all down the track.

john (sholl)
September 12, 2014

I am in my early eighties and my wife and I have a SMSF comprising a portfolio of Australian and US stocks which has both growth and income parameters. Our aim was to have a steady income and slowly increase the capital in the SMSF over time to counteract inflation. To this date, the aims have been achieved using the assistance of a reputable stock broker and an accountant. The amount we spend annually has not diminished, but the items we spend it on have changed. You tend to spend more time in hospitals and less on cruise liners as you age.

Brian
September 12, 2014

My wife and I are 66 and typically we travel overseas twice a year. We travel on a fairly tight budget but travel is the single biggest item in our annual budget. Looking forwards I don't see any major change in our non travel expenditure.

With regards to travel I think we may want to only go overseas once a year as we get older but when we do it will be a higher standard of travel and accommodation. So basically I do not envisage any great change in our after inflation expenditures.

This is a personal viewpoint and of course health concerns may result in us not going overseas at all. In the end I think planning for old age needs to be at a personal level. I don't find surveys of how other people's incomes on average varied with age to be useful. These are averages often taken in the past in other countries taking no account of the health of the individuals involved.

Douglas
September 12, 2014

I am 77 with a 66 year old wife, since retirement 4 years ago we have travelled overseas on an annual basis, yes the costs are fairly significant; however we do not plan to continue these treks forever. We are in good health and enjoy a great lifestyle, manage our own retirement pensions and have a good mix of over the counter indexed bonds, plus cash and equities. We figure that our zest for travel overseas is waning and the A$ does not have as much purchasing power as the past few years, so accordingly we will see more of Australia before we get to the age where we can,t be bothered!
So, I go back to Alex,s reply to John and say to all retirees, every person has different objectives and needs in retirement, so there is no one answer.
However, if you have the money, travel whilst you are in good health, then you will have no regrets in your "real" old age.

Warren Bird
September 10, 2014

I'm in my late fifties now and intend to be travelling, dining out, going to theatre, etc just as much in 10, 20, 30 years from now.

My wife and I did a hiking tour in Italy a couple of years ago. We were among the youngest there! There were several in their late 70's/early 80's including a couple from South Africa who do a hiking tour every year. The lady was one of the quickest walkers in the group.

Everyone will be different. It depends on health, interests, etc. But if you plan on slowing down, you probably will. You reap what you sow.

Alex
September 12, 2014

Warren, all power to you.

My reading of the article I refer to is that you are in the majority for late 50's and their future life style plans (I am late 50's too), but that the "reality" (based on surveying those 60's, 70's year old etc) does not really match it.

The survey data shows average expenditure reduces with age brackets, rather than increases (ie the standard 70% of your working income plus 3-4% inflation every year for the rest of your life), and this has significance for those pondering "how much do I need".

The survey is saying on average those knees of yours will not agree with your current ambitions down the track.

I would simply ask the question (which is John's original one). If we are all to base our retirement planning based around essentialy one big assumption, which is more accurate? Your life style costs on average increase with age or in fact decrease? The modelling on "how much do you need" changes significantly.

Alex
September 09, 2014

John, a very good question. Please Google the following article. “FDA Journal – Reality Retirement Planning” . An American article from 2005 by Ty Bernicke. This addresses exactly your point. It makes a lot of sense to me but is not reflected in any advice i have seen on “how much do you need?”.

 

Leave a Comment:


banner

Most viewed in recent weeks

Vale Graham Hand

It’s with heavy hearts that we announce Firstlinks’ co-founder and former Managing Editor, Graham Hand, has died aged 66. Graham was a legendary figure in the finance industry and here are three tributes to him.

The nuts and bolts of family trusts

There are well over 800,000 family trusts in Australia, controlling more than $3 trillion of assets. Here's a guide on whether a family trust may have a place in your individual investment strategy.

Welcome to Firstlinks Edition 583 with weekend update

Investing guru Howard Marks says he had two epiphanies while visiting Australia recently: the two major asset classes aren’t what you think they are, and one key decision matters above all else when building portfolios.

  • 24 October 2024

Warren Buffett is preparing for a bear market. Should you?

Berkshire Hathaway’s third quarter earnings update reveals Buffett is selling stocks and building record cash reserves. Here’s a look at his track record in calling market tops and whether you should follow his lead and dial down risk.

Preserving wealth through generations is hard

How have so many wealthy families through history managed to squander their fortunes? This looks at the lessons from these families and offers several solutions to making and keeping money over the long-term.

A big win for bank customers against scammers

A recent ruling from The Australian Financial Complaints Authority may herald a new era for financial scams. For the first time, a bank is being forced to reimburse a customer for the amount they were scammed.

Latest Updates

Shares

Looking beyond banks for dividend income

The Big Four banks have had an extraordinary run and it’s left income investors with a conundrum: to stick with them even though they now offer relatively low dividend yields and limited growth prospects or to look elsewhere.

Exchange traded products

AFIC on its record discount, passive investing and pricey stocks

A triple headwind has seen Australia's biggest LIC swing to a 10% discount and scuppered its relative performance. Management was bullish in an interview with Firstlinks, but is the discount ever likely to close?

Superannuation

Hidden fees are a super problem

Most Australians don’t realise they are being charged up to six different types of fees on their superannuation. These fees can be opaque and hard to compare across different funds and investment options.

Shares

ASX large cap outlook for 2025

Economic growth in Australia looks to have bottomed, which means it makes sense to selectively add to cyclical exposures on the ASX in addition to key thematics like decarbonisation and technological change.

Property

Taking advantage of the property cycle

Understanding the property cycle can be a useful tool to make informed decisions and stay focused on long-term goals. This looks at where we are in the commercial property cycle and the potential opportunities for investors.

Investment strategies

Is this bedrock of financial theory a mirage?

The concept of an 'equity risk premium' has driven asset allocation decisions for decades. A revamped study suggests it was a relatively short-lived phenomenon rather than the mainstay many thought.

Vale Graham Hand

It’s with heavy hearts that we announce Firstlinks’ co-founder and former Managing Editor, Graham Hand, has died aged 66. Graham was a legendary figure in the finance industry and here are three tributes to him.

Sponsors

Alliances

© 2024 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.