Speaker 1: I don't do very many financial based videos on this channel,
but I came across a study by JP Morgan that
I just thought I had to share with you. And
it's all about the differences about retirement spending. About things
we've heard for years and years and years and years
that might actually be wrong, or at least according to
this latest study. Now you've probably all heard the advice
plan for seventy to eighty percent of your pre retirement income,
you need at least a million dollars budget carefully keep
spending steady. Well, this madeor study by JP Morgan Asset
Management says otherwise. I will post the link to it
in the comments so you can take a peek for yourself.
But in fact, they found three big surprises in how
real people actually spend their money in retirement. So today
I'm going to walk you through them. They're clear, simple,
and a few tips along the way to help you
to prepare. So if you're new to my channel, my
name is Marian Debernski and this is Life Starts at Retirement.
My typical videos are about retirement lifestyle and how to
make your retirement remarkable, but this is a little bit
more on the financial advice, and it was really too
good not to share, So let's dive in. Most people
assume that retirement spending stays about the same every year,
but increases with inflation. In fact, I've watched so many videos,
video after video after video where the financial planner simply
increases your financial plan by the rate of expected inflation
until you die. But the data from this study from
JP Morgan tells a very different story, and that it's
actually a curve that happens. So it starts high in
the early years, when you're acting, of when you're traveling,
when you're checking things off your bucket list, and then
it gradually declines through your seventies and eighties as life
slows down. But of course it's not always the same
for everyone. There's twists and turns in each person's One
the biggest twist that we always think about is the
healthcare challenges or healthcare spending as you age. So although
your total spending might drop as you age, specific categories,
especially healthcare, can rise. So this just means that your
retirement plans just to be needs to be more than
just a flatline budget. It needs a little bit more
of that flexibility. Now I have a video about your
go Go, Slow Go and no Go years that really
explains this a little bit better. I'll link that in
the comments. So the surprise number two about from this
JP Morgan study was that retirement isn't necessarily all or nothing.
And this is fairly recent. I'm going to say, within
the last ten to maybe twenty years, that people when
they retire don't necessarily now work for the same company
for forty forty five years and then hoof, one day,
they're gone. This study found that over half half of
US households are what they call partially retired, so that
means they've left their full time work behind. They still
earn some income, maybe part time income, consulting, side hustles
and something, so they're still having a part time income. Now,
this is where I am. I left corporate Canada in
two thousand and seven. I went out on my own
as a mortgage broker. Worked really really hard, worked full
time for years and years, but I was out on
my own. Today, I still do private lending. I don't
do much where would I still do private lending. I
have a group of individuals that I work with. I
have this YouTube channel and I speak on cruise ships
as a destination or a cultural insights speaker. So I'm
one of those half, although I'm in Canada, but I'm
one of those households that still earns income from a
part time income source. But here's the kicker. These households
just like mine tend to spend more, especially for some reason,
especially if they earn under one hundred and fifty thousand
dollars a year. Now, why would that be? Why would
these households tend to spend more? And I think it's
simply because this extra income gives us permission to enjoy
life a little bit more. We have more dinners out,
we travel more, we have hobbies, we spend more I
do on my grandkids. So instead of spending less in retirement,
the people that are doing working part time actually spend more,
at least in the beginning. But then, for reason the
hire income households those earning one hundred and fifty thousand
dollars or more don't show the same bump. Their spending
stays flatter. And just I guess I'm going to say,
if you're earning over one hundred and fifty thousand dollars more,
it's more than just a part time gig. And if
it's not, please let me know how you do that.
But anyhow, but so what does this mean for you? Well,
if your reply, if you are planning on retiring gradually
or to retire on some part time income, just be
prepared for that little spending spike, build it into your
plan and just be aware of it. And here's the
big one that they say is a shock. Now, I
think this is typical, but they say spending is not consistence,
it's volatile. In the years before and after retirement, over
sixty percent of households experience of swing of over twenty
percent more up or down compared to their previous spending.
So think about it. In our twenties to twenty to
about forty ish, we're spending a fair amount of money.
We're just getting out on our own. We've got a
new job, we have to get a new car. Oftentimes,
then we meet someone, maybe get married, have children, buy
our first home. There is a fair amount of spending
in those early years. Forty late forties even to fifties
were for me anyhow, that was probably my highest of
my working spending years. We bought new vehicles, we traveled
a lot, we upgraded our home, so there was a
lot of bigger purchases for us. And then into retirement
for us just simply because we travel so much, again
we have a bump in spending, but it's different. And
again because I work part time, that spending is still volatile.
One month we'll spend a ton and then one month
we're back at home, we're at the trailer doing not
as much. So it's so volatile. It's up and it's down.
And then finally, even people in their late seventies or eighties,
they still seem to see a major shift in how
much they spend year to year. Now, that could be
maybe a big medical bill, in particular for anyone that's
in the US. Canada we have free it's not free,
but free healthcare, so we don't have that same spending worry.
It could have been a home report repair, it could
have been a wedding, sadly a funeral, or just maybe
it's a once in a lifetime trip. So the point is,
retirement spending is not as predictable as we've been led
to believe. We've been led to believe here it is,
there's inflation and a way you go, so your plan
needs to be able to handle the bumps. Now, how
do you use this information to your advantage? Well, first
of all, ditch the flat spending estimate. Plan in phases
early retirement, retirement, and later years. Again, they're called your
go go years, your slowgo years, and your no go years.
And as based on your lifestyle and your health, expect volatility.
You know, build in a buffer in your retirement plan,
whether it's an emergency fund or maybe a few more
liquid investments. Make sure you can handle surprises in any
of these years. And number three, don't underestimate the cost
of freedom. If you're planning a fun and active retirement,
especially early on, be honest with yourself about the cost.
Now having said that, you've earned it, enjoy it. Don't
feel guilty one little bit, just plan for it. So,
just as a bit of a recap retirement, spending is curved,
not flat, it's higher in partial retirement. If you're working,
especially if you're working part time, you can give yourself
permission to spend a little bit more and it's volatile.
Big swings are normal even late in life. So this
study challenges the traditional retirement advice and honestly, I think
that's a good thing, because retirement isn't about hitting just
one magic number. It's about living fully. It's about living
with confidence, finding out who you are, knowing that your
plan fits your real life. So let me just ask
you this. Are you planning for a flat retirement or
a flexible one? Have you accounted for the curve, the spikes,
the surprises. If not, now's the perfect time to revisit
your plan, your budget, and your priorities. So drop me,
come it. Let me know how your retirement is, if
any of these three surprises caught you off guard, or
which one have you already experienced? And if you found
this video helpful, don't forget to hit that like button.
Subscribe for more real talk about retirement now, Oh, make
your retirement remarkable. I'm Morey Dbranski. This is life starts
at retirement. I'll see you next week.