Exploring the Retirement Consumption Puzzle

by David Blanchett, CFP®, CFA

Wanting to learn more about consumer spending in retirement? This article discusses the following topics:

  • Empirical research on retiree spending has noted a “retirement consumption puzzle,” where retiree expenditures tend to decrease both upon and during retirement. This decrease in spending is inconsistent with general economic theories on consumption, which suggest individuals seek to maintain constant consumption over their lifetimes.
  • Government data on consumption was analyzed in this study to understand how retiree consumption actually changes over time.
  • The results of the analysis suggest that although the retiree consumption basket is likely to increase at a rate that is faster than general inflation, actual retiree spending tends to decline in retirement in real terms. This decrease in real consumption averages approximately 1 percent per year during retirement. 
  • A “retirement spending smile” effect is noted. This finding has important implications when estimating retirement withdrawal rates and determining optimal spending strategies.

Propriety Reverse Mortgage Products Could Eclipse FHA’s HECM Program in 2019

Written by Jamie Hopkins on July 2, 2019

The reverse mortgage market world heads in reverse away from the government created Home Equity Conversion Mortgage (HECM) and towards new propriety products. This is an encouraging sign because any healthy market needs competition, innovation, and variety. However, recently HECM program has been the driving force behind the reverse mortgage world, leaving many without an ideal solution to utilizing home equity as part of a sustainable retirement plan.

The article can be found here.

3 in 4 Need More: The Essentials for Long Term Care Planning

The 3in4 Need More campaign a national awareness campaign to educate Americans about the need to form a long term care plan and which products, services and options could be part of that plan. The key message is “Health Insurance Isn’t Enough; 3in4 Need More.” And who better to raise this awareness and communicate this message than agents, financial advisors, insurance carriers and planners?

https://www.myseniorventure.com/nb/index.php?broker_link=3in4needmore