Foodies, Homebodies, and Globetrotters: Which Retiree Are You?
Always on the lookout for new retirement insights, I stumbled upon a 2015 J.P. Morgan study (Spending In Retirement – Roy, Carson) that provided yet another way to view spending patterns of retirees. In the past, I’ve written about something called the ‘retirement smile’ that highlights the natural changes in spending patterns during successive phases of a typical retirement, during the phases of Go-Go, Slow-Go, then No-Go. And while that is one way to help us define spending phases, knowing who you are can also help us more finely-tune likely spending just as much as how old you are.
In this study, researchers found that each of us spends quite differently than others, just based on our areas of passion and habits. For example, it turns out that 40% of retirees are ‘foodies’ who spend a disproportionate amount of income on dining out, food and beverages. ‘Homebodies’ comprise 30% of retirees, spending more than their peers on housing-related items. And those of you who love to spend more lavishly on travel, ‘globetrotters’, make up around 5% of retirees (some quick math suggests 25% of retirees defy categorization). Which category would you choose for yourself?
While it’s fun to consider who we are as retirees, the benefit of doing so may shed light on how we should prepare for spending changes throughout retirement. For example, a globetrotter is very likely to see their overall expenses decline significantly as they age because of the decreased ability to travel. However, a homebody doesn’t see a similar decrease in their home-related expenses unless they sell the house and downsize. As a result, a globetrotter and homebody experience much different spending patterns during retirement because of what they value most.
The larger opportunity here is to recognize the patterns that are most likely to impact your spending, and plan accordingly.
While I hate to have to mention this, there is a fourth category of retiree called ‘health care spender’ which is fairly self-explanatory. Those with health-related issues may find themselves spending an outsized amount on health care needs.
What should we do with this information? Well, I’d start by deciding in which area do you intend to ‘spend rich’? By being clear about your desired lifestyle, you can allocate resources better, which can have the effect of reducing your guilt about your spending during retirement. And while I generally discourage people from comparing themselves to others, I think it is helpful to see that others are inherently interested in different activities than you…and that’s okay. This way, seeing somebody taking more trips or dining out more often than you doesn’t necessarily mean they’re richer or more successful than you are, it just means they enjoy different activities than you.
Whether you’re a foodie, a homebody, or a globetrotter, the act of planning for your passion can allow you to embrace that which makes you different than others. So go out there and be weird, be you, just know that you’re not alone; somebody made a category for you.
Do you have enough?
Retirement Income Planning is one of the most critical components of a successful retirement plan. Confidently answering the question, “How long will my money last?” can go a very long way toward retiring with the peace of mind you deserve. If you’d like to take advantage of the many tools we use to develop a detailed, written retirement income plan, contact us today. Through the use of our Review Process and state-of-the-art planning software, you’ll sleep better at night knowing you’ve secured enough income to last as long as you do.