Spending In Retirement Also Needs To Be Planned For

Rappaport says it is important for people entering retirement to think both in terms of the long and short term, to establish a budget and to keep records to track progress.

Planning is a very individual matter, she continues, but she believes the first important step is to get people to think about what income they will need in retirement. She says she finds storytelling very helpful, because people connect with it better than if they are just presented with numbers.

Once people are engaged in thinking about creating income in retirement, then they can begin to think about how to ensure that income, she adds.

And, if they have a clearer idea about what they want and need, then they can better work with a financial advisor, Rappaport continues.

What SOA research shows is that people do not accurately estimate how long they will live, according to the report.

Data from the U.S. Census Bureau projects that by 2010 life expectancy for men will be 75.6 years and for women, 81.4 years.

A study titled, ‘The State of 50+ America–2007,’ prepared by AARP, Washington, also examines family income as well as expenditures. In general, for the 50+ population, in 2005, the median family income was $38,000 compared with $36,390 in 2004. The percent of expenditures for “non-essentials” was 47.6% in 2004, up slightly from 47% in 2003, according to the study.

When broken out by age groups, the study found that for those participants age 50-64, the median income in 2005 was $52,000, up slightly from $51,952 in 2004. For the 65-74 age range, the median income in 2005 was $30,028, down from $30,105 in 2004. In the 75+ population, the median income was $20,958 in 2005 compared with $20,354 in 2004.