“Young-Old” is the New Old | Personal BALC #74
Let’s talk about the taxonomy of aging. Once, turning 65 made you “old”. Now, demographers are identifying three separate groups:
The “Young-Old”: age between 65 and 74
The “Old”: age between 75 and 84
The “Old-Old”: age 85 and older
It has been said that faces of the Young-Old adorn the covers of active retiree magazines, and pictures of the Old-Old are pictured on pamphlets in the doctors’ office. Statistically, in terms of disabilities, the Young-Old have few, the Old have a rising level, and the Old-Old are living with them.
Many new retirees have told me that they have lists of things they would like to do before Old and Old-Old come into play. But the things on their list require spending more than they safely can. We can plan for this: Budget an additional amount in the early years of retirement and spend less later on. There are several tools that help us determine the cost of fulfilling your wish list, balanced with the amount of spending that will need to be cut when you’re ready to slow down.
One example – a 65 year-old couple have $46,000 in income per year after income taxes, Medicare premiums and shelter expenses. A basic consumption smoothing program tells us that if they choose to spend $6000 more per year for 10 years, their living standard should be reduced to $43,400, a 5.7 percent cut. If they would like to spend $12,000 more per year for 10 years, their living standard should be reduced to $40,800, an 11.3 percent cut.
Needless to say, these figures will vary with the amount of Social Security income, retirement savings, pension, mortgage, debt, etc. If you’re trying to get a handle on spending during retirement, give me a call. I’m always available to help.
