Your expenses change in retirement. Shouldn't your income too?

Retirement is often painted as a golden period; a time to relax and enjoy the fruits of your labour. But even if you aim to have a similar lifestyle once you retire, your expenses will almost certainly change. Just as life evolves, so do our spending habits.

An analysis of how retirees typically spend over their lifetimes - from early to middle and late retirement - explains why it may be wise to adjust your financial planning too. Let's unpack this to understand it better.

Early retirement: A burst of activity

In early retirement, many people are eager to tick off items on their bucket lists and adapt their living situations in ways that give them more meaning. Whether it's travelling more, pursuing hobbies, giving back to communities or spoiling grandchildren, this phase often sees a surge in spending.

During this period, holidays, leisure activities, the costs of moving to live closer to family and perhaps even deferred purchases all contribute to higher expenses. It's likely that you may want more discretionary income during this time to keep up.

Middle retirement: Finding a new pace

As retirement progresses, expenses typically stabilise or even decrease. With the initial burst of activity settling, you might find yourself spending less on certain things. Perhaps you've already travelled to your dream destinations or completed major home renovations, and life now quiets down to more predictable activities, habits and pastimes. It's often the case that you could afford for your income to adjust lower during this period.

Late retirement: Navigating healthcare costs

In later retirement, healthcare expenses are often a major consideration. As we age, the likelihood of medical needs increases. Whether it's routine check ups, medicine or unforeseen health issues, the costs can add up. A rise in income may now be helpful to meet extra needs and provide financial stability, whatever happens.

The needs-adjustment principle: Is your income enough for your needs?

As you can see, financial needs can vary quite a bit over retirement. This challenges the idea that expenses rise consistently with inflation and highlights the need to adjust your financial plan to your changing lifestyle. Typically, expenses are higher at the start and end of retirement than in the middle. By anticipating these changes, you can make sure your income meets your needs.

At Discovery Invest, we understand how your post-retirement financial needs can change, so we've designed a brand-new annuity to give you the best of both: the peace of mind of a fixed annuity, plus the flexibility of more income when you're likely to need it.

Introducing the Secured Capital Annuity

The Secured Capital Annuity is a fixed annuity designed to give you peace of mind in retirement, through guaranteed income for life. You can leave a capital legacy for your family through life cover, and have the freedom to select how your income grows. You can opt to receive 13th cheques for up to 10 years with age-based income adjustments, designed to match retirement spending habits.

Understanding the changing nature of financial needs in retirement gives you the chance to be proactive now in securing your, and your family's, future. And with features like life cover for your beneficiaries and 13th cheques, Discovery's Secured Capital Annuity offers you financial control and peace of mind when it matters the most. Learn more here.