Roses are red, violets are blue, spend too much this Valentine’s Day and your wallet will be too. According to the National Retail Federation, Valentine’s Day will contribute nearly $18.6 billion to the U.S. economy in 2013, with consumers openly spending more this year than they have in the past five years.
The Federation said people are still shopping conservatively, but they are not spending less. Instead, they are looking to get more for their dollar by heading to discount stores instead of department stores, florists or other specialty stores, with more than one-quarter purchasing their gifts online and men spending more than double that of women.
While purchasing holiday gifts may seem inconsequential during your working years, there are multiple reasons why you should consider them with your retirement planning. Spending for gifts can add up quickly and is often an expense retirees forget to budget for. Retirees also need to consider what precedent they set with their gift giving. If you purchase a vehicle for your eldest granddaughter upon her high school graduation, the same gift may be expected by all other grandchildren when they make the same achievement.
Gifts for holidays, birthdays, graduations, weddings and anniversaries can eat away at your funds rather quickly, especially as your family grows. By budgeting gifts into your retirement allowance, you can avoid overspending and ensure you have enough money to continue giving your loved ones gifts throughout your lifetime. You may even want to forgo annual tangible gifts to save for larger monetary estate gifts instead.
You may want to consider meeting with a Certified Financial Planner to review your savings and spending plans and for help calculating how much you spend annually on gifts for friends and family, and how to best cover the cost of those and any future gifts you hope to make.
Can You Wait? – An individual that has earned income up to the maximum Social Security wage base each year who then waits to take his or her Social Security retirement benefit until age 70 will receive 77 percent more income per month than if he or she had taken a retirement benefit early at age 62 (source: Social Security, BTN Research).
Could You Live On That? – Of the individual income tax returns filed in the U.S. for tax year 2010, 46.1 percent reported less than $30,000 of adjusted gross income (source: Internal Revenue Service, BTN Research).
Better Than Most – The S&P 500 was up 5.2 percent (total return) in January 2013, its best January since 1997. January’s performance was better than 86 percent of the past 300 months. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market (source: BTN Research).