Retirement Spending 101: The Do’s And Don’ts

Retirement Spending 101: The Do’s And Don’ts

Knowing how to spend your retirement money is often harder and more confusing than knowing how to save it.

The basics for saving for retirement are pretty simple. For four, five or even six decades, you painfully learn how to spend less and save more. But once you reach retirement, there are few really good guidelines about how to wisely spend the money you’ve saved.

“Most financial plans are fundamentally incorrect about the real way that money is spent. Retirement spending is not linear,” said Ted Jenkin, CEO of oXYGen Financial in Atlanta and author of The 21-Day Budget Cleanse.

The 3 Periods of Retirement Spending

There is typically an initial three-to-five-year period of retirement “jubilation,” where many retirees overspend, often with more frequent travel as they start checking off their “bucket list” goals, Jenkin said. That’s usually followed by a longer period of “stabilization” — when spending normalizes for the next decade or so. Jenkin calls the last spending period the “five-mile radius,” when older retirees mostly stay closer to home and their spending (except for health care) typically decreases.






By Bruce Horovitz, Next Avenue Contributor

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