Just thinking through some things, in a geeky, yet wholly data-free, sort of way.
Stage one: the Cruise Ship stage. You’re healthy, energetic, and want to make the most of the time that you now have. You go on cruises or play golf, or drive out of town to visit your adult children, or are even that sort of grandparent who does a healthy amount of babysitting if the grandchildren live in town, taking them to the McDonald’s with the playplace.
Stage two: the Senior Lunch stage. You still live independently, more or less, or perhaps between the two of you, are able to stay independent, even if, say, the husband is already more frail and the wife does the driving, or in other ways one partner would be dependent but for the greater abilities of the other. But let’s face it: the highlight of your day is going to the Community Center for lunch, and maybe sticking around to play cards afterwards, or, if your daughter has persuaded/nagged you sufficiently, for a chair or water exercise class. And your kids might need to watch out to make sure that the bills get paid on time, or the taxes or such. Maybe you’ve moved to a condo or other downsized home, or maybe your kids are suggesting this to you as often as they can while trying hard not to nag.
Stage three: well, you can guess stage three. Assisted living. Nursing home. Home health care or other home assistance.
Why am I thinking about this? Because in the retirement world, there’s a lot of thought about spending, and how much retirees need, either as a percentage of their preretirement income, or in an absolute sense. And the challenge is that the income needs (and wants) aren’t level — the Cruise Ship stage involves a lot of spending, or at least the desire for a lot of spending; the Senior Center stage involves very little spending, but other needs (e.g., community programs to encourage seniors to stay active, eat healthily, etc.); and the last stage involves highly unpredictable spending — but whether you’ve got the cash leftover can make a big difference in quality of life, e.g., whether the nursing home is of marginal or good quality, whether the family can hire home health care aides or not, etc., given the gaps in Medicare coverage and the need to liquidate assets before being eligible for Medicaid, and the questionable quality of what Medicaid funds.
And, of course, the bigger trouble is that the trajectory for any given individual isn’t predictable. If you’re hale and hearty for many years, you’d quickly grow unhappy if you spend all your cash in one blow-out trip the first year and are stuck economizing when you’d rather not. On the other hand, your Cruise Ship years are also a time when you’re much more able to work at a part-time income-supplementing job. During the Senior Lunch stage, you might be disappointed at downsizing from your large home, but you probably can’t really enjoy the space any longer anyway and it gets to be a bit too difficult to keep the place up anyway. And the amount of cash you need in reserve if you want to be able to afford a Good Nursing Home, the kind that requires you be able to be a private pay patient for a couple years, is not small — never mind the cost of true at-home care without burdening your adult child into being a full-time caregiver.
All of which make it all the more difficult to figure out what retirement, and retirement funding, should look like in the years to come.
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