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Is Every Day A Saturday In Retirement?

Is every day a Saturday in retirement? That’s what behavioural scientists Dan Ariely and Aline Holzwarth claimed in a recent study about retirement income. The premise being that when you’re no longer working 40 hours a week (or more) all of a sudden you have 40 hours a week available to spend money. Every day is like Saturday. Not to mention, many of the things your employer used to pay for, such as coffee, a smart-phone, or gym membership, now falls on you.

The study’s conclusion? Retirees should expect to spend as much as 130 percent of their preretirement income after they retire. Yikes!

That flies in the face of typical retirement planning advice, which pegs the income replacement rate at around 70 percent of your preretirement income. A lot of expenses should disappear when you reach retirement age. Hopefully your kids have left home, and your mortgage is paid off. You’ll no longer have payroll deductions for income taxes, CPP, and EI. Say goodbye to the long, soul-crushing commute, along with the expensive business attire.

Because of these reasons (and others) some retirement experts, like Fred Vettese, even champion a much lower retirement income target of 50 percent of your income.

On the flip side, in this article about money myths, financial advisor Kurt Rosentreter seems to concur with the Ariely / Holzwarth study:

All the old retirement planning textbooks said you could expect to live off less than your working income (e.g. 70 percent). The reality of what we are seeing in the trenches doing this work everyday is that there are three phases: Age 60 to 70 where we are seeing as high as 110 percent of pre-retirement spending; age 75 to age 85 where costs can drop to 80 percent after the first spouse death; and costs in the final phase of age 85 onward than can be lower or higher depending on health care.

Every day is Saturday in Retirement

Is Every Day A Saturday In Retirement?

This study resonated with me because one of my biggest fears about retirement is that I’ll overspend and completely blow my carefully planned budget.

Why is that a fear?

We do spend more money on the weekend. That’s when we do our shopping, our leisure activities, and when we go out for dinner. Weekends can be expensive!

This gets magnified when we’re on holidays. Every day is Saturday when you’re on vacation, right? A couple of pints of beer (or 9 oz glasses of wine) with lunch, tickets to a museum, maybe go to a movie, it all adds up. There’s lots of free time and we fill it by going to places, doing things, and wining & dining along the way.

Don’t get me wrong. Most of this is planned spending. We save for our vacations so we can enjoy ourselves and indulge in interesting and new experiences. But that’s for a week or two every year. I couldn’t possibly keep up that spending pace for a month, a year, or for our entire retirement. Right?

I’m obviously projecting these feelings into my unknown and far-off retirement, but I wonder if this is a real fear for people, or if it’s just me.

I want to hear from retirees: Did you have an uptick in spending due to your increased free time in retirement? Is every day a Saturday in retirement?

Soon-to-be-retirees: Do you expect your retirement spending to be higher, lower, or the same as your current annual spend?

Let me know in the comments.

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31 Comments

  1. Ted on September 14, 2018 at 5:17 am

    I’m 72 years old, married and have been retired for 4 years. Our total spending has not changed in retirement. Some things decreased and some increased. The main increase was our retiree health benefit plan.

    I wouldn’t pay any attention to those silly “x% of pre-retirement income” rules. Look at what you spend, not what you earn. Adjust that for desired changes in retirement. Then plan how you will fund the resulting amount in retirement.

    It’s not that difficult.

    • Heather on September 14, 2018 at 7:59 am

      Ted, I totally agree. We’ve been planning our retirement for a couple of years, which has started for myself at 60 , due to company closing, and my husband , 63, next month. Two ,three years ago, we wrongly assumed we could live on the 70 % rule. A year ago I started going through our monthly budget and totalling up our monthly/annual spending. It helps that our banks home page catagoizes our spending for us. That being said, for us, expenses aren’t going to change very much ( like most articles say), we certainly don’t have any big expenses that are going to disappear. In fact , the first year we will likely spend more, treating extra days like Saturday and going on a couple of trips.

  2. Richard Russell on September 14, 2018 at 5:19 am

    Spending should be a lot less. To say that now everyday is a spending day is not right. The strategies to save and habits to save don’t disappear once retirement starts.. kids out, no debt, one car, no commute. I think retirement will cost less.

  3. Ron MacDonald on September 14, 2018 at 5:31 am

    I agree with increased spending. We are building a retirement home and budget is blown so we are spending retirement savings. Theoretically we will get it back if and when we sell. But it will reduce income until then.

  4. JP Beaudet on September 14, 2018 at 5:32 am

    My wife and I have been retired for 3 years and yes we spend more now than before. The reasons are as follows: -We know we have a 10-year window of opportunity (we are 65 years old) now’s the time to indulge.
    – We have more time so we do more things we love to do for example we spend more on supplies related to our hobbies.
    -We spend more on our children and grandchildren.
    -What’s the point of saving money if you don’t get to enjoy it.

  5. CanTex on September 14, 2018 at 5:57 am

    We’re 74 and 72, have been retired for 12 years, and thanks to the giddy markets, have been quite free (too free) with our spending. Those of us approaching 75 are “expected” to spend more, because at 76 it becomes midnight and Cinderella’s coach turns into a pumpkin (or so they say). So we have 3 cruises in the next 14 months before I turn 75. After that, we’re supposed to stay inside and close the drapes, per financial folklore. Not! We live in Texas (ex-pats) but that GTA condo is not free. We have RMD (from the US) and RRIF income so that makes us look richer than we are. We are spending a lot more than when we worked. Oops!

  6. Jim on September 14, 2018 at 6:10 am

    Ted is spot on. Track your expenses closely for a couple of years before retirement and make sure your retirement funds generate at least that level of income. Everyday is Saturday in retirement which doesn’t mean you have to go out abd spend money. Living beyond your means is what makes it hard for people to save enough for retirement and run through their retirement savings once they do retire.

  7. Gary Oram on September 14, 2018 at 6:30 am

    Retired
    It’s a sprint at first. Then reality sets in and you end up with too much month at the end of the money.
    My wife of 44 years (today) she was diagnosed with breast cancer two years ago. That was an emotional expense more than anything since we couldn’t go anywhere or spend on bucket list items just to and from appointments. Bless the people and our government in healthcare.
    Thankful for a critical illness policy that paid out 25 grand.
    The sneaky expense items are life insurance premiums, grandkids,house renovation/upgrades, overall living expenses. Everything seems to cost so much more. A plumber for God’s sake charges $85 an hour plus vehicle expense!
    I worked in s&@t all my life. That was dentist wages.
    I am so happy with retirement and recommend it to everyone.

  8. Carl on September 14, 2018 at 6:31 am

    I’m 44 and I’ve been retired 6 months and I just did a 6 month checkup on our spending and it is almost identical to what it was before. It is still about discipline. You’re a disciplined person to get to early retirement, so you will be fine. Btw retirement is awesome!

  9. Eva on September 14, 2018 at 7:17 am

    After a couple of years of retirement (which is fabulous without the daily grind of work by the way) I would agree with Ariely. Even though we are disciplined about budgeting, we are spending more on activities like travel, golf, skiing, movies, hobbies. Also the price of everything seems to be going up so much more than in the past. On top of that there is the thought of doing things while we are still healthy enough to do them. And that’s without kids to worry about helping out etc. So yes, I am not surprised at all that retirees spend more, especially in the early years.

  10. Ron on September 14, 2018 at 7:19 am

    My wife and I have been retired for several years. Throughout our careers we were dedicated savers and a good thing too, as life after work can be expensive. Those trips we put off were waiting to be taken and the cost of services to maintain our home and our car have just kept climbing. But other than for those extraordinary expenses we are still on a day to day basis as we have always been, frugal although not painfully so even on fixed income. Everyday is still Saturday but we do not measure each one in dollars and cents.

  11. Steveark on September 14, 2018 at 7:30 am

    I’ve been retired for 3 years, I retired at 60. My wife has been a home maker for 30 years. Because I work a day or two a week as a consultant and that involves travel, my expenses for that and a lot of associated entertainment are paid for with other people’s money. Because I continue the volunteer work I did prior to retirement that takes care of another day or two. We do travel more, hiking Italy next month! I’d say we spend about 90% of what we did while working. My savings rates was about 75% when I left full time work. My consulting is lucrative and covers our costs so we could spend at least twice what we do and never run out of money but we are very happy with our lifestyle. I buy used cars though I could buy new luxury models if I chose. After a lifetime of sensible spending it just feels wrong to waste money for status items.

  12. Tom on September 14, 2018 at 7:30 am

    “We’re richer than we think!”
    The golden ticket was given to us by my father-in-law, before he died, when he offered to pay off our (modest) mortgage.
    I had already retired, had one daughter in university and a son finishing high school.
    We could have managed—we were aware of what was ahead— but it would have meant several, if not many, years of scrimping.
    Being mortgage free has made a world of difference to my 16 years and my wife’s 15 years of retirement.

  13. Connie on September 14, 2018 at 7:41 am

    Sure everyday may be a Saturday however that doesn’t mean you have to spend money. Yes some expenses went down some up, the remainder has been about choices. Discretionary spending is just that. If folks decide to spend more during the first years of retirement why not – provided they have the money to spend. Not everyone does. Many seniors are barely getting by. What you have to spend in retirement is what it is and may not be 50, 70% or more of what your earning income was. Base your future on reality not on what people think it should be.

    • Tom on September 14, 2018 at 7:25 pm

      I agree with Connie. We’ve been retired for 7 years now and do indeed spend more now than when we were working. But a lot of our spending is by choice, such as our travel budget and our recent decision to buy a new car. The key is to stay within your own means, and those are different for everyone. We each have small defined benefit pension plans, plus CPP and OAS. Not a fortune each month, but we’ve been debt free since long before retiring. We don’t need to draw on our savings, other than the standard RRIF withdrawals. So we’re quite fortunate compared to many others. If our fortunes changed, then we’d need to adjust our budget by cutting back on travel, dining out, and other non-essential spending. But we’d be fine. So let’s stop the nonsense of 130% vs 70% vs whatever. Everyone’s needs vs retirement income vary. As long as you can cover the spending that’s necessary for your circumstances, that’s what matters. Final comment: make sure you have a good budgeting process in place. Having one has made our spending in retirement so much more manageable.

  14. Gail Bebee on September 14, 2018 at 8:03 am

    We spend less in retirement, and that varies by year, depending on the amount of travel we choose.
    No more money dedicated to saving for retirement reduces costs considerably along with no more mortgage, no kids to raise, no CPP/EI and other employment related expenses (commuting, clothing, coffee, lunches out etc.). Travel expenses early in retirement will be higher, but this is balanced by the reduction in expenses. We find that we only want to eat out so much as restaurant food is often too salty, too fatty .
    The key to a financially successful retirement is to cost out your intended lifestyle before retirement and make sure, before you retire that you have saved enough to meet your lifestyle needs in retirement.

  15. Alan5948 on September 14, 2018 at 8:05 am

    I am 74 and my wife is 73. We’ve been retired several years. We have never been big spenders and that continues in retirement. We do spend money on travel. This year we went to Australia, Hawaii, France, Singapore, Vietnam, Cambodia and back to France. We know we won’t be able to travel forever so we’re doing it now. Later we’ll be in a retirement home or no longer on this earth and won’t need the money then.

  16. Angelo Bin on September 14, 2018 at 8:17 am

    Retired nine years, wife seventeen years. I keep telling her that we have to spend more. At the end of the year, we always have more money in our Savings account. We go South for two months, travel to Europe every year for a month, and take many side trips during the summer
    We always saved so some of those habits are hard to break.
    Yes, I wake every morning smiling, thinking about how lucky we are.

  17. John on September 14, 2018 at 8:25 am

    My wife and I have now been retired for a number of years and there is no doubt that spending patterns change in retirement, gone are heavy expenses in raising children, paying mortgages, commuting expenses car payments , payroll taxes, high clothing budgets etc. There was aways a strong urge to save for unknown retirement expenses.
    Now our largest expense is travel, followed by municipal taxes. Worrying about having much more time to spend is offset by the fact that one can use that time to spend wisely, taking advantage of sales events etc. I think that for those of us who had firm savings objectives it is necessary to consciously change our mindset and be more relaxed about spending in retirement, after all what are you saving for now.
    I should also mention that we have been fortunate , healthwise so far, but that can change quickly. There is lots of advice out there about retirement planning, some good, some not so much.
    Everyone’s retirement experience is different. If one is fortunate, the freedom alone is very satisfying.

  18. Chris on September 14, 2018 at 9:04 am

    We have been retired for 8 years. The first year of retirement was spent travelling in our RV through US and across Canada. The next 7 we have spent 5 months every winter down south except for one when for health reasons we stayed home. My husband is the spreadsheet king so we know how much we spend to the penny! When we stayed home we spent approx a third of our preretirement income when we travel we spend half of our preretirement income.
    I agree that sometimes it is hard to go from a savings mind to a spending mind. But we know that travelling is for the first phase of retirement. Retirement has been wonderful and I expect it will remain so as long as we are both healthy. We are very lucky to have the life style we have. I am aware that there are many people, mainly women, who are in a very different life style.

  19. Pavan Kumar Khanna on September 14, 2018 at 9:57 am

    I am 60 years and thinking to enjoy my time with flexibility and do some consulting until the age of 65. My wife is still working so still not started using savings. I think it’s depends on the habit you have so far about spending money on daily expenses but they will reduce over a period of time. 70% of your income is quite reasonable for enjoying retirement life.

  20. Fred on September 14, 2018 at 10:08 am

    Retired for three years now and can say that every day is a Saturday but that does not mean that expenses go up. If you have planned your retirement right, your house is paid off, you have savings to make up for your drop on income, you will be paying less tax which by the way will be your biggest expense! Have not started collecting CPP or OAS, looking forward to spending that but also know my taxes will increase! While officially retired, I do pick up some odd jobs doing things that I always wanted to do like being a lifeguard, or tourist guide driving a boat. I have to remind my bosses that they can’t work me more than a day or two a week because then it will become work and I will quit. I do it for the social interaction and money earned is immediately spent on a night out or other fun thing to do. Retirement is what you make of it, plan for it and then you will have the freedom to do what you want.
    I

  21. Claire on September 14, 2018 at 10:10 am

    My expenses in retirement are actually a little higher, because many of the common assumptions are wrong for me. I don’t own a home, so monthly rent continues to be a (gradually increasing) expense. My “long, soul-crushing commute” was a 20-minute bicycle ride, so no savings there. Because my last workplace was business casual attire, my wardrobe hasn’t changed much. Really, my only decreased expenses have been the regular putting-aside of retirement savings, plus payroll deductions (somewhat offset by now having to pay the provincial medical plan and extended medical/dental out of pocket).

    I find that most retirement rules of thumb assume the retiree is a homeowner, and don’t speak to the increasing numbers of retirees (like us) who will never own a house or condo. The 70% rule cannot apply to people like us, and never will.

    Fortunately, we also have a huge retirement egg that allows us to spend more now than we did when I retired last year. Most people would consider us to be modest spenders, but our budget has room for planned splurges, some small and regular (lingering over a daily Americano at our favourite cafe — no latte factor for us!), others large (a month-long trip to Japan). Like most people, we economize fiercely on some things to be able to luxuriate in others.

    So yes, every day now feels like a Saturday to us. We did a lot of belt-tightening to get here, and now we’re enjoying it — mindfully, but thoroughly.

  22. Wesman Philips on September 14, 2018 at 10:12 am

    To each his/her own thing. We’re in mid 60s, have been retired for almost 5 years. We contribute 50 – 50 to our retirement funds. Our spending has increased on home and property maintenance but cut on others so we can live within our means.
    We always believe in not spending more than what we have in the bank.

  23. Judy on September 14, 2018 at 10:38 am

    I’ve been retired about a decade. Our habits haven’t changed all that much. We still aim for one travel vacation a year, just like we did when I was working. Our favorite activity is walking/hiking (or, for my husband, bicycling) – minimal costs for that. We don’t golf. We’re not shoppers – we are no longer interested in acquiring cool things (“what will I get for that at my next garage sale??”). We still have pretty well the same mix of restaurant vs home-cooked meals, although we are cutting back on the restaurants (incompatible with current state of health!!). As others have mentioned, much of the spending that we do is discretionary, so if we felt a financial crunch, we could deal with it.

  24. BILL on September 14, 2018 at 6:26 pm

    Percentage of preretirement income is not a good indicator. I’ll have 7 years of detailed spending data when i retire so I’m comfortable with what I need, what i want and nice to have for spending after taxes. Then use on line estimates for income taxes, splitting income if you can and arrive at your needs bottom up.

  25. Lori on September 14, 2018 at 10:57 pm

    I’m a single female, retired a bit over six years ago at age 58. I took early retirement to escape from a stressful job. For me, the prospect of living on less money was more appealing than continuing with a job that was contributing to health issues. So now, over six years later I’m glad I took that route. Health has improved. My net income has actually been close to what it was while working because I have minimal deductions now and I can spend all my monthly income, versus saving 20-30% of it.

    I’ve been travelling solo for a few months every year (mostly European countries) and that is my largest expense and priority. Expenses for single people are always higher versus two people sharing, but I enjoy going solo. Frugal by nature, I do live it up while traveling and do whatever I want, always choosing nice, centrally located accommodations wherever I go so I can walk to many of the sights that I’m interested in (google street view helps with that!) I’m ‘youthful” for my age and enjoy European train travel and meet lots of interesting people wherever I go.

    I scale back a bit when I’m at home, but don’t feel that I’m missing out on anything. I dine out occasionally with friends but enjoy creative cooking and prefer to eat at home much of the time using high quality ingredients. Healthy nutrition is at the top of my spending list…. I live on the west coast and there are plenty of recreational activities, like simply taking a peaceful stroll along the waterfront. I enjoy every day being Saturday, doing whatever I please. I’m a night owl by nature and love not having to get up early if I don’t feel like it.

    Retiring early was the smartest move I’ve ever made. I live within my means, carry no debt, and life is good! I’m currently busy planning my next big annual European adventure. For me, so far, retirement has turned out to be better than I actually expected and my income goes further than I had anticipated. I do spend more than I did when I was working as I don’t have to save a chunk of my monthly income anymore. Earlier frugality paid off. Lots of lovely Saturday’s now!

    • Heidi on September 15, 2018 at 1:54 pm

      Hi Lori, wow, thank you for your comments! I’m planning to retire soon as well due to health and stress issues. I have the “golden handcuffs” conflict as well, my retirement income will be quite low, but my health is being impacted negatively by my work. I also love to travel in Europe, and plan to do much more of that when I’m done. (I’m also on the west coast, and eat healthily!) Thanks for the comment “Retiring was the smartest move I’ve ever made.” Perhaps we will bump into each other in cafe in Paris!

  26. Dwight on September 15, 2018 at 8:39 am

    I have been retired for six years now, and would highly recommend it. Is every day a Saturday? I guess that depends on what a person normally does on Saturdays. Saturdays were always chore days for me, and that has not changed. When I was working, we often shopped on Saturdays, but during retirement I find that it is much easier to shop Tuesdays or Wednesdays, when stores and traffic are not nearly as busy. We often have entertainment on Fridays and Saturdays because that is when most entertainment is offered, although if an opportunity exists during the week we certainly give it a look. We do not spend more in retirement, although we may be changing that. Our winters are way too long, and summers too short, so we have been experimenting with Arizona the last few winters. The idea is to live there for the same cost as here, and we are closing in on that goal. If the exchange rate was 1$US = 0.80$CN, we probably could break even. Overall, our annual costs would increase, but not by much since when we were working we typically would take a two-week winter vacation to an all-inclusive or a cruise. If travel costs are excluded, our annual expenses have remained constant. Most snowbirds return permanently to Canada about when they turn 80 because travel health insurance becomes too expensive, so at that time annual costs would likely drop. We do watch our investments and what we spend on an annual basis, but we don’t worry about money, neither are we extravagant.

    • Dwight on September 15, 2018 at 4:07 pm

      Correction: Make that 1 $CN = 0.80 $US

  27. Sarah on September 20, 2018 at 9:25 am

    I’m FIREd. I found that our overall expenses didn’t change much at all. Mind you, we had already dropped everything that was not necessary for our happiness. I have more time to participate in (free) events now that my calendar is open and/or search for less expensive times to do the things that we want to do. As for weekends, I’m a Homemaker with two young kids so I never went shopping on weekends (too busy). I make sure to only go out shopping one day a week and that helps keep down my impulsive/unnecessary shopping. But, that has more to do with being conscious of my choices than not having enough money. I used to be worried about not having enough money but then I realized that we would make it work no matter what. We have a sweet deal going on right now, we “rent” a (family house) from May to November in exchange for maintaining the property. From November to May, we winter south (Mexico). For now it works. When it doesn’t, we’ll come up with another plan. Until then, we’re living our dream and still saving money!

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