Spending Time and Money Differently

Spending Time and Money Differently — Mid and Late Retirement Brings Lifestyle Changes


Mid and late retirement will bring notable changes to how you spend your time and money.  

Active adults find it hard to imagine that they may slow down at some point. For them, the notion of actually becoming a “senior citizen” is a bit unnerving. When we are in our prime, it’s difficult to imagine a time when we might be less agile or alert. But the effects of aging catch up with nearly every long-lived person, so it is important to prepare.

Once you reach the middle retirement years, you will likely cut back on some of your more expensive activities.

Gradual shift

The Bureau of Labor Statistics collects a tremendous amount of data on how Americans spend their days. They have been tracking what we do in their annual “American Time Use Survey” through the daily diaries of thousands of participants.

The Bureau tracks how much time older Americans spend

  • Working
  • Doing household chores
  • Enjoying leisure activities
  • Sleeping

They look at averages for all people in the age group and across a seven-day week.

We see that from age 55 to 75, on average, people cut back on work (no surprise there) and gradually increase the time they spend at leisure and sleeping. Of course, the dishes always need doing, so there is little change in household chores regardless of age.

Expenses gradually change, too

People living in their middle retirement years tend to cut back on some of the more expensive activities like traveling or eating out, so in many cases, total expenses drop. According to the Bureau of Labor Statistics, the average costs for food and housing drop by 20 – 25 percent and average costs for transportation and entertainment can drop by 40 percent! But older people often have additional out-of-pocket costs to help maintain their self-sufficiency. This might include hiring people to do work around the house – cleaning, lawn mowing, repairs and painting – jobs people once did themselves. To continue to live independently, some also incur expenses modifying their homes, particularly adding safety features to bathrooms.

In order to determine whether expenses are going up or down, it’s a good idea to revisit the budget every few years to make sure things remain on track and in the black. This could mean increasing or decreasing how much you draw from your savings or changing the way your money is allocated.

Giving and gifting

By mid retirement, people have often gained a better sense of how their finances will be for rest of their lives. Once they know how much they will likely need for the remainder of retirement, many people set up a gifting strategy and start passing their money on to heirs and favorite charities. It can be pleasant to give money away while one is still alive and able to enjoy the reaction or effects.

In the case of charitable giving, there can be tax advantages for donors. Donations of up to 50 percent of their annual income are tax deductible. And amounts over that can be prorated for five years. Gifts to people (up to $13,000 per person, per year in 2013) can have tax advantages for the recipient. Gifting within that amount is not considered income and is therefore not taxable for either the recipient or the donor. Couples who want to gift can each give up to the annual maximum without a tax effect. So, in 2013 for example, Mr. and Mrs. Parent can each gift to a child and the child’s spouse, effectively giving the couple up to $52,000 a year, tax free (at the 2013 rate). Here's how it works:

Relax and enjoy

A slower lifestyle can have its upside. You can spend time catching up on movies you always wanted to see and books you never had time to read. You can share memories and enjoy friends and family. Even if those folks are miles away, advances in technology can help you to do it all from the comfort of your favorite chair.


ING U.S. does not offer legal or tax advice. Before making an investment decision, please consult with your personal legal and tax professional.