subscribe to our newsletter sign up

Behaviour fuelling retirement spending, not income

Retirement, retiree, spending of retirees,

Retiree spending has less to do with income and more with lifestyle, a new report with “important implications” for super funds has found.

According to a new report from consulting firm Milliman, retirees’ age is as strong a behaviour indicator as income levels. This puts a major question mark next to traditional benchmarks, like the use of a percentage of final salary as a retirement savings target without making allowance for changes in lifestyle.

The Retirement Expectations and Spending Profiles report found the median retired couple will see expenditure fall by 36.7 per cent as they shift from early retirement (65-69) to later retirement (85+).

It also found that retirees across all income levels experienced similar falls in expenditure, while high-income retirees actually save money. Across all income levels, spending on food, energy, goods and services, housing, travel and insurance tends to be similar; declining slightly or remaining steady. Naturally, healthcare spending shoots up.

However, there is a divergence between high- and low-income earners, with high-income households likely to have higher energy bills, however both see spending trend upwards as they grow older – possibly down to hopes to make home more comfortable than a retirement village.

“This data and the trends it reveals have important implications for super funds attempting to meet the needs of their members. It should feed into communication strategies, general and personal advice and product design,” Milliman said.

“In this way, funds can meet the actual lifestyle needs of their members.”

Behaviour fuelling retirement spending, not income
Retirement, retiree, spending of retirees,
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
Anonymous - Why does this get all the media attention when in reality it affects very few and the charges are minimal? How about reporting on all the ISA TPD.......
Anonymous - This got to be the smartest comment this century ?!....
nan - So what do you do if you are being ripped of and then can't afford the body corporate fees....
MarkL - The banks may not charge dead people any more ........... but they won't charge them any less either!....