I wonder if this hasn’t gone off the rails a little from the original context. Some of it is probably just a matter of interpretation.
Since I believe it was my original statement (in a different thread about withdrawal strategies) to the effect that I am anticipating that my retirement spending will decrease for some period of years, which seems to have prompted this discussion, allow me to elaborate on my thinking.
I would absolutely counsel caution to anyone who is planning anything like a lean FIRE spending model and is also incorporating some reduced spend model in their plan. There isn’t much give in the budget in that scenario to absorb reductions. If your spending is mostly on things you really need to live, then of course you are going to be stuck at that level.
In my specific case, my plan does include anticipated spending reductions before an increase in spending associated with needing more assistance or having a more expensive living arrangement. My reduced spend time is the few years before those. I will have paid off my mortage for one thing. That ‘reduced’ spending is still as much as I spend today, and have spent for years in what is certainly not an ascetic level budget! It’s just reduced somewhat from the expected higher spending that I am planning for in the first 20 years of my retirement. If I were planning to simply maintain my current lifestyle into retirement, I would not be making any spending reduction assumptions.
Would it be nice to have so much money that I can budget now for spending that same go-go lifestyle throughout my retirement years until I pass away from the smoke of all my birthday candles? Sure it would. But now we’re in Bogleheads mode of retirement planning, where we work more years to be extra super rich before we confidently enter retirement. It has always been one of the tenets of Mustachianism that you don’t need $5MM to retire and have a great life, that you don’t have to work more years of your youth because you’re scared of running out of money.
It’s for all of us to find a balance that works for us, at least as much as we can predict our own future needs and desires.
As to the general proposition that ‘people’ generally do follow this spending model, there have been several analyses that show the effect across wealth levels. There’s also evidence that on average a high percentage of retirees have as much or more money 15-18 years into their retirements as they began with. And those folks still tend to have these years of reduced spending. So I don’t think we can say that this behavior is caused (primarily) by lack of funds. I think it’s pretty reasonable to deduce that it’s a combination of reduced mobility and reduced motivation more than just reduced financial wherewithal.
Yet again though, this is applying aggregate data to an outlier population.
I'm not at all surprised that older wealthy folks spend less as they age, even given what I've said. But wealthy folks also tend to spend a lot more when they're able bodied as well.
These generally aren't folks who have piles of cash, but at DIYing things around the house, camping instead of staying in hotels, biking or driving used econocars instead of luxury SUVs.
My entire point that I've tried to make over and over again is that the spending patterns of outlier populations aren't going to follow the spending patterns of the general population.
People here are frugal lifestyle optimizers. We're all about purchasing the highest quality of life for the lowest price. And being able-bodied contributes to a lot of that optimization.
Most wealthy people spend way more than Mustachians do and most not wealthy people can't afford the premiums that health limitations demand for maintaining the same quality of life.
I'm not saying every Mustachian will spend more, but the ones who love doing a ton of activities, who don't enjoy really simple lives, are probably mostly able to do very cheaply because of physical capital.
As they lose that physical capital, they'll either need to increasingly abandon activities, or spend more to be able to continue doing a lot of things.
I'm a "do a lot of things" kind of person. I always have been, and I likely always will be. I'm seeing a clear and easily identifiable pattern that as my physical capital depletes, I'm more and more willing to spend on things to be able to keep doing things.
My point is for anyone who is living a highly optimized lifestyle that involves a lot of activities that require being able bodied to do them, which is A LOT of Mustachians, that they should be extremely cautious expecting to follow the expectation that it's a given that they'll spend less in their later years.
Many people could paint themselves into a financial corner if they base their plans on that expectation and then have the rude awakening that that can't afford the increased costs of a lot of their favourite things as disability sets in.
Again, maybe this won't be an issue
for you but as someone who is literally living this experience
right now of physically slowing down but spending not slowing along with it, I strongly caution people here to contemplate what an optimized lifestyle would look like with a less functional body.
And remember again my previous point that the people who live the longest are always the healthiest ones. My 90-something patients have always consistently been healthier than my mid 70s patients on average. There are some extremely active and vital 90-somethings out there.
My friend's 94 year old mom was just DIY repairing her own windows last year.
And it's not just my opinion, please see this article about how the oldest people in our society are actually "astonishingly healthy." Yet again, because those people are outliers who survive that long.
https://www.scientificamerican.com/article/the-oldest-old-are-astonishingly-healthy/Also, as
@Villanelle said, we're not saying everyone should save massive amounts more. We're just saying it may be kind of foolish and shortsighted to
plan on spending less just because the populational/aggravate data suggests this pattern.
I would never just assume that my spending will go down, that seems incredibly risky to me. Also, even a modest fund that's left alone to grow will be massive by the time you're 90 if you live that long. So no one needs to save enormous extra amounts, but it certainly doesn't hurt to
not plan for a spending reduction when there's plenty of reason not to depend on it.
