Key Points
- The average upper-class retiree aged 82 is estimated to spend approximately $8,078 per month.
- Retirement spending generally decreases with age. Data shows a significant drop of about 22% between the 55-64 and 65-74 age brackets.
- A vast majority of retirees live on much less, with only 3% spending over $7,000 per month and just 1% exceeding $10,000 monthly, according to the Employee Benefit Research Institute (EBRI).
- Despite having significant assets, the spending of wealthy seniors is often lower than that of the average upper-class household, reflecting a shift in lifestyle and priorities.
- Financial planning remains critical for affluent retirees, who often face unique challenges such as complex estate planning and wealth transfer strategies.
As people approach their golden years, a primary concern is whether their nest egg will be sufficient to support their lifestyle. For most, retirement involves a more modest budget. However, for the upper class, the financial landscape looks different, though perhaps not as lavishly as one might assume, especially as they enter their 80s. A new analysis based on consumer spending data provides a fascinating glimpse into the monthly budget of a wealthy retiree at age 82.
The Overall Trend: Spending Decreases With Age
It’s a common pattern that spending habits evolve throughout retirement. Many individuals have paid off major liabilities like mortgages and car loans by the time they cease working. Furthermore, lifestyle changes contribute significantly to this trend. A survey from Transamerica highlights this reality, revealing that 50% of retirees report their spending has decreased, while only 11% say it has gone up.
This decline is further quantified by data from the Employee Benefit Research Institute (EBRI), which shows that very few retirees, regardless of wealth, maintain high levels of expenditure. Only a small fraction—3%—spend more than $7,000 per month, and a mere 1% spend over $10,000. This is in stark contrast to the spending habits of younger, high-earning households. According to the U.S. Bureau of Labor Statistics’ Consumer Expenditure Surveys (CE), the average monthly spending for the highest quintile of earners across all ages is approximately $12,508. This suggests that even the wealthiest retirees significantly curb their spending compared to their peak earning years.
Calculating the Monthly Spend of an 82-Year-Old
To understand the specific spending habits of an 82-year-old, we must analyze the available data more closely, as direct statistics for that precise age are limited. The process involves a two-step estimation using CE survey data.
H3: Tracking Spending Declines Across Age Groups
First, we look at how average spending changes as people age.
- Ages 55 to 64: Average household spending is about $6,948 per month.
- Ages 65 to 74: This figure drops by approximately 22% to $5,429 per month.
- Ages 75 and over: Spending declines again by another 19% to an average of $4,419 per month.
This data indicates a consistent downward trend, roughly equating to a 2% decrease in spending per year after age 55. By taking the midpoint of the 65-74 age bracket (age 70, with spending at $5,429) and applying this 2% annual decline for 12 years, we arrive at an estimated average monthly spend of $4,163 for a typical 82-year-old.
H3: Adjusting for an Upper-Class Lifestyle
The second step is to adjust this average figure for an upper-class individual. The CE data shows that the highest-income quintile spends about 94% more than the average household. By applying this 94% increase to the estimated average for an 82-year-old, we reach the final figure.
$4,163 (average for age 82) x 1.94 = $8,078
While this calculation is an approximation, it provides a well-grounded estimate that aligns with other survey data. It suggests that while wealthy 82-year-olds spend significantly more than the average senior, their expenditures are still substantially lower than those of affluent working-age individuals.
The Importance of Continued Financial Planning
Even for those with a comfortable nest egg, financial planning should not stop at retirement. The decrease in spending in later years does not eliminate financial complexities. For the upper class, challenges often shift from accumulation to preservation and distribution. Issues like estate planning, managing investment risk, and creating strategies for philanthropic goals or family inheritances become paramount.
Engaging with a financial advisor or retirement specialist can be a prudent step, even for those who feel financially secure. A professional can help ensure that strategies for spending, investing, and risk management are aligned with long-term goals, providing peace of mind and allowing for a more enjoyable and stress-free retirement.
