When planning retirement, anticipating expenditure can be difficult.
When planning retirement, anticipating expenditure can be difficult. Particularly, essential vs discretionary spend, or put more simply, needs vs. wants. A recent Milliman report reviewed the spending patterns, behavior and trends of Australian retirees over the past 20 years.
The data shows that the percentage of expenditure between essential and discretionary items doesn’t change drastically throughout the course of retirement, as shown in the graph below. The split is roughly 50:50 across the 20+ year period.
In terms of how the spend on essential items changes over time, the graph below shows how retirees in the 70th percentile of wealth spend their money throughout their retirement. Spending on essentials like food, household goods, clothing and communications remain steady over time. As to be expected, travel, transport and leisure spending declines with increase in age.
It is important to understand as a retiree or soon to be retiree where your money will go. Depending on your interests and priorities, what will your needs vs wants split be? Understanding the common spending categories will help you plan your retirement spending and ensure your financial assets will see you through your retirement.
(The information is provided by leading credit bureau, illion, in partnership with economists at AlphaBeta. This research is sourced from customer-consented anonymised data used by illion to undertake research, analysis and product development. For further information including access to greater frequency, additional variables and detailed analysis of industries and geographies, please email: illiondata@ alphabeta.com)
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May Wealth Pty Ltd ABN 71 612 234 518 trading as Steve May Financial Services is a Corporate Authorised representative of Futuro Financial Services Pty Ltd ABN 30 085 870 015, Australian Financial Services Licensee, Licence number 238478.
Steve May and Luke Styles are Authorised Representative’s of Futuro Financial Services Pty Ltd ABN 30 085 870 015, Australian Financial Services Licensee, Licence number 238478