What people do in retirement, hour by hour

Retirement columnist Glenn Ruffenach also answers a question about inherited IRAs and withdrawals.

  • By Glenn Ruffenach,
  • The Wall Street Journal
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Q: In a recent column, you recommended that a person, before retiring, should plan a daily/weekly routine and draft a household budget. I think that’s easier said than done. Are there any good starting points? How do many/most retirees spend their time? And how does that affect their spending?

A: Good questions. Actually, much of retirement is simpler—more straightforward—than you might imagine. And that can be a good thing for your nest egg.

A good starting point is the Bureau of Labor Statistics and its American Time Use Surveys. As the name indicates, this research looks at how, where and with whom Americans spend their time. Fortunately, much of this data is available for different age groups; thus, we can get a good idea of what older adults do on a typical day.

According to the Pew Research Center, which has analyzed the ATU surveys, Americans age 60 and older sleep just over 8½ hours a day, on average. About seven hours are spent on leisure; three hours on chores and errands; a little more than one hour on eating; about one hour on personal activities, such as grooming and health care; and just under an hour on unpaid caregiving and volunteering.

Work remains part of the equation, as well. Men age 60-plus spend two hours a day, on average, on paid work; women age 60-plus spend one hour and 12 minutes.

Looking more closely at leisure, the average person age 60-plus spends the bulk of their leisure time—about 4¼ hours each day—in front of a television, computer, tablet or other electronic device. (That’s an increase of almost 30 minutes in the past decade.) The balance of leisure time is spent, among other activities, on socializing, reading, listening to music, attending events, etc.

What to take away from all this? Two things. First, yes, mapping out what a typical day or week might look like in retirement can appear daunting. But much of retirement will be taken up with those activities—eating, socializing, watching TV, sleeping, exercising, doing chores—that already are part of most people’s calendars. As such, you already have a good idea, whether you realize it or not, about what a good chunk of retirement will involve.

Second, as we can see, the average day in retirement involves a fair amount of puttering. And puttering—whether it’s screen time, bicycling, visiting with family, volunteering—typically doesn’t cost a lot of money.

Indeed, a study several years ago out of Texas Tech University in Lubbock looked at the top 20 activities of middle-income and high-income retirees (age 50 and older and at least $60,000 in household income). Researchers found that retirees spend significant amounts of time on “inexpensive leisure activities” (like watching television and reading) and “household production activities” (such as preparing meals or working in a garden)—neither of which drains a lot of cash from savings accounts.

A case in point: Retirees, according to the Texas Tech study, spend 34 minutes a day, on average, on “food and drink preparation,” compared with just 17 minutes for full-time workers. Translation: Retirees are more likely to eat in than dine out or buy prepared foods, and are saving money in the process.

So, again, try to plan what your days might look like in retirement before you get there. Yes, some behaviors will change (you’ll have more free time), and that can affect spending levels. But having new free time doesn’t automatically mean spending more money.

Q: A substantial portion of my estate is in individual retirement accounts that designate my spouse as primary beneficiary. I understand that when I die, those IRAs will pass directly to my spouse and that she must retitle the accounts and take required withdrawals based on her age. At that point, she can designate our children as beneficiaries of those retitled accounts. When she passes on, can our children—after retitling the accounts they inherit from my wife (their mother)—take their required withdrawals over their lifetimes?

A: Not if Congress has anything to say about it.

At the moment, your children, if they (and your wife) follow long-established guidelines, could set up inherited IRAs and withdraw funds from those accounts over their lifetimes. This is known as a stretch IRA. But all this could change soon.

In late May, the House of Representatives overwhelmingly approved legislation that, among other significant changes in retirement planning, would effectively end the stretch IRA for many heirs, says Ed Slott, an IRA expert in Rockville Centre, N.Y. To be specific, under the House bill an individual who inherits a tax-advantaged retirement account after Dec. 31, 2019, would be required to withdraw all the money within a decade of the original account holder’s death and pay any taxes due. At the moment, exceptions include surviving spouses and minor children.

The bill, called the Secure Act (Setting Every Community Up for Retirement Enhancement), has moved to the Senate, which is already considering similar legislation.

So, to return to your original question, your wife—if this legislation reaches President Trump’s desk and if he signs it—could still, upon your death, transfer your IRA assets to her IRA and withdraw funds over her lifetime. Your children, however, would see their withdrawal timetable shortened considerably. And there appears to be strong bipartisan support in Congress for doing just that, Mr. Slott says. Stay tuned.

Q: In a recent column about Social Security, you mentioned that a couple must be married at least one year before either spouse is eligible for a spousal benefit. I thought you had to be married 10 years before you could claim spousal benefits. Please clarify.

A: I think you might be confusing spousal benefits with benefits for a divorced spouse.

If two people divorce, one of the requirements to claim Social Security benefits as a divorced spouse is that the marriage must have lasted 10 years or longer. The question and answer in my recent column involved, simply, the issue of marriage. Again, for the most part, a couple must be married at least one year before either spouse is eligible for a spousal benefit.

If you wish to dive into the finer points of spousal benefits (and who doesn’t), including some twists on the one-year rule, check out the Social Security Handbook, Chapter Three, Section 305.

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