Implications for Retirement Income Sustainability


How does a typical expenditure pattern change in retirement?

The answer to this question is central to retirement planning. It’s not only how much money one needs to accumulate for retirement, it’s also crucial to estimate what a sustainable income really is.

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Retirement Spending Pattern - Implications for Retirement Income Sustainability

Sadly, we have no crystal ball. Neither do retirees. And while it’s crucial to for advisers to ask clients about their hopes and aspirations for retirement, most retirees have little idea how their expenditure will change as they get older. Thus, insights into how retirement expenditure patterns change over time are crucial to establishing how much savings a person requires at retirement and how long a savings pot will last.

A good starting point is to examine the data on how expenditure changes during retirement. The data does have its limitations, but it’s a good starting point for retirement planning assumptions and most certainly more effective than plucking figures out of thin air (an approach the industry has been far too comfortable with).

A number of studies offer valuable insight into what a typical retirement spending pattern might look like.

Retirement Spending Pattern -