Active retirement: This period is often characterized by a desire to enjoy a busy lifestyle filled with travel, entertainment and other leisure activities. While individual spending patterns vary widely, many new retirees experience an increase in discretionary spending in order to pay for these activities.
Passive retirement: This is the stage when energy levels may begin to decline and health issues surface. Devoting more time to family and friends and staying closer to home becomes the preferred way to enjoy leisure time. Discretionary expenditures will likely decline only to be replaced by rising health care costs.
Elderly care: This phase is often marked by a significant decline in physical and mental capacity, a further reduction in vigorous activity and increased health and age-related expenditures.
To better understand human development and spending behavior researchers and practitioners in the fields of psychology, sociology and marketing have studied changes that individuals, couples and families exhibit over their lives. Not surprisingly patterns emerge at various ages and stages in life as people experience major life cycle transitions such as launching a career, starting a family, preparing for a departure from the workforce and then retirement and old age. Personal finance researchers and more recently financial practitioners have begun to make extensive use of these same approaches in studying how people do and perhaps more importantly should make the kinds of financial decisions that have far-reaching consequences for themselves and their families.
John Spoto is the founder of Sentry Financial Planning in Andover and Danvers. For more information, call 978-475-2533 or visit www.sentryfinancialplanning.com
This article is for general information purposes only and is not intended to provide specific advice on individual financial, tax, or legal matters. Please consult the appropriate professional concerning your specific situation before making any decisions.