The 2013 paper “The Retirement Income Equation” by Marlena Lee, PhD considered how much income is needed to support individuals in retirement by exploring savings rates and spending needs.

The paper noted that, because of changes in certain spending patterns, overall spending has typically decreased. For example, when a homeowner’s housing expenses decline after paying off a mortgage or an individual moves from the workforce into retirement.

Here we highlight the findings for three significant spending categories.

Leisure Spending Tends to Increase in Retirement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Care Spending Tends to Increase in Retirement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Work-Related Spending Declines in Retirement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Marlena Lee, PhD, “The Retirement Income Equation.” Dimensional Fund Advisors, June 2013. All spending category data sourced from Dimensional Fund Advisors.

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