The Impact of Partial Retirement on Household Spending Patterns

Are you considering a phased or partial retirement? According to retirement strategist Sharon Carson, this may be a more achievable outcome for married couples who strategically coordinate their retirement decisions. In fact, more than half of American households do not retire all at once, with individuals working part-time in retirement and spouses retiring at different times.

Carson’s research shows that partially retired households tend to spend more in the years preceding retirement and continue to spend more post-retirement than their fully retired peers. This spending surge can be attributed to various factors, such as increased healthcare costs, new caregiving obligations, and overall cost of living.

Financial professionals can use this information to spark new conversations with their clients about their desired retirement timeline and help them balance the risks associated with longevity and spending volatility. By understanding spending patterns in retirement, individuals can better prepare for a financially successful future.

Carson’s research also highlights the importance of managing debt and spending earlier in life to foster greater retirement readiness. By carefully planning and considering the potential impact of long-term care costs, individuals can reduce the stress of managing ongoing expenses in retirement.

Ultimately, the key takeaway is that understanding the spending curve and how volatile spending may increase long-term risk is critical when designing a successful retirement plan. With careful, data-driven retirement planning, individuals can navigate the uncertainties of retirement with confidence.