In a recent column for CNNMoney.com, Money Magazine editor Walter Updegrave offered advice on how to approach the various stages of retirement – and how consumers can make their savings last throughout. It may be useful for some to think of their retirement in the three stages that many people experience.
The first is often characterized by increased spending, as recent retirees celebrate their freedom from the workplace by traveling the world or making similar splurges. Individuals are prone to slowing down in the second and pursuing a sedentary lifestyle, due to physical or mental setbacks, in the third. Spending generally decreases as retirees travel through these stages.
Unexpected expenses can make it difficult to plan for stretching one’s savings over the course of his or her retirement. Spending too little early on can leave individuals with excess cash toward the end of their lives, while excessive spending may create further troubles.
“The last thing you want in those slow-go years is the anxiety of wondering whether your savings are going to hold out as long as you do,” Updegrave wrote.
Differences in lifestyle and health can also affect how one’s spending fluctuates throughout retirement. Therefore, retirees may want to rigorously track their expenses and allocate enough savings to cover unexpected costs. Online retirement income planners offered by T. Rowe Price and Fidelity can help calculate these expense in comparison to one’s income and investments.
Tight economic conditions have made it more challenging for many consumers to set aside money for retirement. A survey by the Employee Benefit Research Center showed that 69 percent of workers, or their spouse, had saved for retirement. Americans also intend to remain in the workforce longer, with 33 percent of the survey’s respondents planning to retire after 65.
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