For a long time, it may seem like old age and retirement are faraway life events. However, like everybody else, you age every day, and it’s only a matter of time until you realise that you’ll be retiring in a couple of years.
By that time, you might wonder what your lifestyle might be like. Well, it mostly depends on how you’re preparing for your financial future today.
And to help you envision how your life will be when retirement comes, here are six common retirement lifestyles according to Morgan Stanley.
1. Home hobbyists
From the term itself, it’s easy to imagine what kind of activities preoccupy these retirees. They frequently spend a lot of money refurbishing their homes and may also engage in other interests. These may include vintage automobile restoration and contributing to charitable causes, leading to early spending that’s above what’s typical for a retiree.
In order to enjoy the company of friends and family at home, entertainers spend a greater portion of their income on food and beverages. Compared to other retirees, their overall spending tends to decrease more quickly when they first enter retirement as their interest in entertaining begins to wane.
Everyone wants to travel, but globetrotters take it to the next level as they spend a significant portion of their income (even before retirement) on going from place to place. Their travel costs rise much higher when they retire because they have more free time for travel, particularly in the early and middle years of retirement.
4. Early retirees
These retirees embrace the concept of carpe diem wholeheartedly, so they retire early and spend more money overall. They focus their spending on self-fulfilment or self-care, so travel and relaxation take precedence. This is an enjoyable retirement lifestyle if you have a sizable nest egg.
5. Healthcare spenders
Prioritising their health above all else, healthcare spenders allocate a large portion of their discretionary income to paying for higher insurance premiums for supplemental plans, prescription drug costs, and specialised treatments that go beyond what’s covered by insurance.
6. Average retirees
The spending habits of average retirees reflect the typical spending pattern of most retirees. They tend to spend more during the start of their retirement when they have a lot of activities planned — which are actually items they’ll be spending on. Then they spend less as they approach their mid-retirement years when they’ve done most of what they wanted to do. However, as they age and become frailer, they may see their expenses increasing, especially in relation to health and aged care.
Prepare for retirement today
Everyone has a dream retirement lifestyle, and whichever it is for you, preparation is key.
A dream retirement is achievable if you save diligently during your working years and make wise investment choices.
You can start planning for your retirement as early as now. With the help of your financial advisor, you should be able to prepare well for it.
If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.