Living to 100 is Going to Cost You MILLIONS
“To a long and prosperous life!”
From the long list of toasts that you might raise a glass for, this one may be the most hypocritical...
Instead of prosperity, a new study shows the longer we live, the more likely it is we are to face poverty in our later years.
As we enter into a new era of modern science, and research consistently shows those born today have a strong likelihood of living to the ripe age of 100, we see the toll it will take on our minds, bodies, and wallets...
According to an analysis of data from the Bureau of Labor Statistics, the average American who lives to be 100 will spend $3.5 million in his or her lifetime.
By the time these centenarians celebrate their 50th birthdays, they have already spent more than $1.5 million as they reach their half-way point.
After the “midlife financial crisis,” the next 30 years will take on another $1.4 million price tag.
Today the average 50-year-old can expect to live until 81, so for those thinking their time may come sooner than their 100th birthday, we can assume their tab will amount to about $2.9 million.
Experts say these high costs of living often come as a shock to retirees, many of whom expect to dramatically cut back on their living expenses as they get older and stick to a fixed budget. "A lot of time people actually end up spending more money in retirement than they may have spent when they were working," says Heidi Schmidt, a wealth manager in Dallas with USAA.
But where does all the money go?
Well the answer lies within the decade you're currently basking in the beauties of life within. For example, most people in their 60s spend a lot of their savings on entertainment like extravagant vacations and splurging on a new car or boat. The mentality is “I'm still young and now I've got the money, let's spend it!”
Whereas those in their 80s shift their splurging sprees into medical bills, paying for ways to continue to enjoy life.
This analysis is not set in stone, though. Experts say that some of the factors that play a role in the generational spending habits have to do with health, personality types, and general fiscal characteristics. Retirement spending will be much less in America through careful planning and investing, along with some good fortune.
Here is the breakdown on how spending tends to differ throughout the retirement years...
During Your 60s
Housing (mortgage, utilities and décor): $155,500
Still at the ripe age of homeownership, much of this decade's spending aims to maintain the idea of your house as your temple.
Furnishing and appliances: $15,000
With a bit more time to watch QVC and late-night infomercials, splurging is okay.
Entertainment and eating out: $46,700
Cooking a family meal decade after decade gets tedious, so live a little and go out on the town for dinner — or enjoy your newfound empty nest and go on a vacation.
Getting around during your 60s has its challenges, so get going!
Since most people in their 60s are newly retired, they tend to spend more on clothing and travel than they do in later decades of life. And according to the Bureau of Labor Statistics, the average recently retired American spends $2,300 a year on activities like going to the movies, caring for a pet, and buying the latest gadgets. Those figures drop to $1,300 after 75 years of age.
During Your 70s
Total health care costs: $48,000
Now that the grays have set in, the wrinkles are showing, and the joints are aching, keeping your body in shape is no cheap endeavor.
Prescription drugs: $8,100
Ginseng, ginkgo, and multivitamins are just a few supplements that this age group washes down with water daily.
Household repairs: $16,400
That house you made a home also ages like you do, and repairs cost more than remodeling or furnishing.
We can't assume that all of this is due to forgetting to turn off the television and kitchen lights before going to bed, but we're guessing a good amount is...
When people reach this decade in age, health care costs take up the majority of their bills. As SmartMoney explains:
Longer life spans and the rise of chronic illnesses have pushed up national health care spending, according to the Kaiser Family Foundation. People in their late 60s and early 70s spend an average $4,900 a year on healthcare, an increase of almost 30% from people in their late 50s and early 60s, according to the Bureau of Labor Statistics. Adding to the burden, health-care costs are expected to grow faster than income over the coming years.
During Your 80s
Health insurance: $30,300
More money continues to go toward treating health conditions and preventing others than anything else.
Entertainment and eating out: $26,000
The traveling and luxurious vacations may be limited, but grabbing a matinee and catching the early-bird specials continue...
With so few home-related goods being purchased, simply eating takes on more of a burden.
Prices in gas won't be dropping anytime soon, and this age group can do some damage on the car's fuel tank with the frequent starting and stopping at 15 MPH slower than the speed limit.
This decade spends 57% more on health insurance and half as much on entertainment as the 50-somethings.
Many retirees begin to save more money in their later years by moving in with their adult children. According to a survey released in 2010, 21% of adults age 85 and up live in a multi-generational household that includes at least two adult generations or a grandparent. That number is up from 17% of people in their late 40s and early 50s.
During Your 90s
Out-of-pocket long-term care: $14,000
With the amount of things this age group can no longer do without assistance, long-term care can become crucial to keep on pushing to the triple-digit mark.
Assisted living: $89,000
With the number of 90-plus people likely to quadruple by 2050, the prices for assisted living will continue to rise.
Adult day services: $36,400
Habitual daily activities don't cost what they used to. These days, a hefty amount of the 90-somethings' money goes just toward eating, sleeping, reading, and crossword puzzles.
Health costs clearly grow at a rapid pace from one's 50s to their 90s.
1.9 million American senior citizens depend heavily on Social Security and pensions. Almost half their income is from Social Security, while a fifth of it comes from retirement pensions.
With the direction that Social Security is going — coupled with the financial crisis the U.S. government is facing — projections pinpoint Social Security to have only enough funds to cover 75% of scheduled benefits after 2036...
And with the baby boomers looking to quadruple the population of 90-somethings in America, it looks as though living to 100 years old will be costly. People may be retiring much later in life.-5
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