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Personal Finance (Not Investing) • Expense drop 1% per year on retirement?

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In the New Retirement youtube, there was a mentioned that a common model is that expense drop 1% per year. When I was poking around in Empower dashboard, it had the same assumption by default. How realistic is this modeling?

I thought for most people, the spending pattern is more like a smile.
First there is more spending when you first retire because you travel around and enjoy your retirement,
then you get older and travel less, causing a drop in spending.
Finally your spending creeps up due to medical bills.
I'm 12 years into retirement and the "smile" model has worked well for me so far.
.. tracked my mom's retirement for over a decade. She is not exhibiting a smile, but instead her expenses creep up, usually because her rent is raised. I think for retirees who has a sparsity mindset, the expense just go up because they are already at a minimum.
Could be. In any case, you can probably judge whether your mom is past that initial part of the "smile".
Does she still want to travel multiple times a year?
Does she have pent up desires (aka bucket list) that cost $$ to fulfill?

Statistics: Posted by doobiedoo — Fri Jun 14, 2024 1:50 am — Replies 5 — Views 579



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