Across the globe, working people assume they’ll spend less once they retire.
But is that a correct assumption?
HSBC bank surveyed 16,000 people in 15 countries to canvas their real-life experiences after retirement.
Over half of all workers say they’ve seen no reduction in their spending after retirement, and almost 20% have seen their spending actually increase.
Why is this a concern? It’s not rocket science. The more you spend, the more money you need to save to retire comfortably.
What’s behind the surprising uptick in spending?
The main culprit is medical costs.
“Although people are familiar with the concept of increasing life expectancy, (and) the consequent increase in later life medical and nursing care costs …… people are still not doing enough to prepare themselves for these potential costs.”
Don’t think workers have their heads entirely in the sand.
HSBC reports that “nearly one in eight workers [12%] across the world expect they will never be able to afford to retire fully.”
That number rises with age, as workers get more pessimistic as they approach their retirement date. Once they reach age 55, almost 20% expect they will have to continue working indefinitely.
The takeaway: What can you do to make sure your retirement plans don’t get derailed by unexpected expenses?
The best thing you can do is start with a realistic understanding of your current spending. You would be surprised how many people have no idea what they really spend, and decline to track their spending because it’s “too much work.”
Without knowing where you are today, how on earth can you plan for tomorrow?
There are plenty of good (and free!) cash flow tools out there. We have custom worksheets we use with clients, but Quicken, Mint, and spending calculators available through Kiplinger Personal Finance magazine or various consumer agencies can do the trick just as well.