When a person retires, a shift in spending patterns tends to manifest itself throughout the different stages of a person’s retirement. Initially, as you leave the work force, there is, of course, a reduction in the taxes you pay. In the preretirement period, you were paying FICA taxes and spending money on work-related needs, such as commuting expenses, meals away from home, etc. After retirement, many of these expenses decrease while others increase. Household expenses decline steadily with age. Using age 65 as a benchmark, household expenses decline by 19 percent in the first decade of retirement, 34 percent by the end of the second decade of retirement and 52 percent by the end of the third decade in retirement. “Home and home-related expenses remain the single largest spending category for older Americans,” according to Sudipto Banerjee, of the Employee Benefit Research Institute. Banerjee further reports, “Health-related expenses are the second largest component in the budget of older Americans. It is the only component which steadily increases with age. Health care captures around 10 percent of the budget for those 50-64, but increases to about 20 percent for those ages 85 and over.” Read More >
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Chad Terry, is a Director of Value Add and Retirement Marketing for BlackRock and is responsible for the development and delivery of wealth management programs. email@example.com
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