Personal Finance

10 Top Ways Retirees Plan to Spend Their Savings

10 Top Ways Retirees Plan to Spend Their Savings

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Despite the uncertainties of the last year, nearly three-quarters (74%) of a representative sample of American workers and retirees recently told pollsters they’re feeling “confident” they’ll have enough money to last the rest of their lives.

Roughly one-third of those optimists (29%) are “very confident,” according to the annual Employee Benefit Research Institute’s annual Retirement Confidence Survey.

Pollsters for the nonpartisan think tank interviewed a racially and ethnically diverse sample of 3,017 people age 25 and older. About half were retirees; the rest were workers. The research was done in January 2021. The EBRI routinely studies topics related to workers’ retirement, health and benefits.

We’ve focused on findings about how retirees (not including workers) are spending or plan to spend their retirement savings, aside from bills and necessities. Here are the retirees’ choices when asked to select three top priorities from a list of options.

10. Spend on a vehicle

Senior driver
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Retirees who say this is among the top three ways they use or will use their savings: 11%

Spending savings on cars, boats, RVs or other vehicles was among the top 10 uses for retirees’ savings.

RV traveling is an appealing retirement pastime. People age 55 and over make up 9.3% of the more than 11 million RV-owning households in the U.S., reports the RV Industry Association.

9. Spend on basic needs

pharmacist senior man patient prescription pharmaceuticals pills prescription pharmacy
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Retirees who say this is among the top three ways they use or will use their savings: 13%

The survey asked retirees to name their spending priorities “[a]side from paying for basic necessities and routine bills.” But not all retirees did that.

Despite the optimism expressed by the survey generally, a sizable chunk of the retirees — 13% — selected this response: “None of these/ Everything will be spent on basic necessities and bills.”

8. Donate money to religious organizations or charities

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Retirees who say this is among the top three ways they use or will use their savings: 14%

Sharing with faith groups and charities is a priority for 14% of retirees, the EBRI survey finds. If you are among them, it’s great to know that — even with the 2017 changes to the federal tax code — charitable giving still can offer tax benefits for retirees.

Incidentally, if you hope to shelter Social Security income from taxes, donating to charity from an IRA’s annual required minimum distribution may help.

7. Spend money on family now

Grandparents with grandchildren
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Retirees who say this is among the top three ways they use or will use their savings: 17%

The survey finds 17% of retirees spending or intending to spend savings on gifts now (separate from an inheritance) to help family members “with things they need or may enjoy.”

In previous research, the EBRI found that older households tend to use more of their budget for gifts and contributions, and their spending on entertainment shrinks.

6. Set aside money to leave an inheritance

Portrait of older parents and adult daughter.
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Retirees who say this is among the top three ways they use or will use their savings: 18%

“Saving/holding money aside” to leave an inheritance was a priority for 18% of retirees polled.

If leaving an inheritance matters for you, take steps to prepare the right legal documents so you’ll feel confident that your wishes will be carried out.

Here are “8 Documents That Are Essential to Planning Your Estate.”

5. Spend money on home improvement

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Retirees who say this is among the top three ways they use or will use their savings: 25%

Retirement often inspires people to examine how and where they want to live and prepare their homes for this next stage.

A quarter of retirees in the EBRI’s survey named “spending on home improvements, renovations or home furnishing” as a top priority for their savings.

Here are “5 Home Improvements That Help You ‘Age in Place.’”

4. Spend money on leisure activities

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Retirees who say this is among the top three ways they use or will use their savings: 32%

Of those surveyed, 32% are spending, or will spend, savings on leisure or entertainment. That includes dining out, buying clothes and spending on electronics or media.

Entertainment is one of “11 Huge Retirement Costs That Are Often Overlooked.”

3. Set money aside for health or long-term care

Senior man in long-term care insurance facility
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Retirees who say this is among the top three ways they use or will use their savings: 34%

Health care and long-term care put big demands on retiree budgets.

The retirees in the survey acknowledge that: A full 34% chose spending, saving or holding money aside for health or long-term care needs as a top priority for their retirement savings.

2. Set money aside to grow

Smiling senior woman holding money
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Retirees who say this is among the top three ways they use or will use their savings: 38%

Retirement can last several decades or more, which means a basic understanding of how to invest savings so the money will grow. “Holding money aside, saving or investing the money so that it continues to grow” was a top concern for 38% of retirees surveyed.

Here are “7 Keys to Stress-free Retirement Investing.”

1. Spend money on travel

Senior couple
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Retirees who say this is among the top three ways they use or will use their savings: 43%

Wanderlust is big in the retirement years, the survey reveals. The largest group — 43% — among the seniors surveyed said they are using, or plan to use, retirement savings to fund travel.

Here are “6 Countries Where You Can Buy a Home for $100,000 or Less.”

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.


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