- This study examined the financial management practices of a
group of middle and upper class retired couples in a period of rising
prices and relatively fixed incomes.
The objective of this study was to describe (1) financial planning
of retired couples, (2) expenditures of these couples, (3) adjustments
of their expenditures to income, (4) place of credit in their
financial management, (5) financial management problems faced since
retirement, and (6) feeling about their financial position.
The data were obtained from a sample of 50 couples who considered
themselves retired. They lived in an adult community near
Portland, Oregon, owned or were buying a single-family dwelling
and were willing to cooperate in the study. The 50 couples were
interviewed in their homes during the summer of 1971. The age
of the husbands at retirement ranged from 52 to 79 with a mean age of 64.8. The mean number of year retired was seven. Based on
Hollingshead's Two-factor Index of Social Position, all the husbands
were from the middle or upper social positions. In 1970, incomes
of the couples ranged from $2,000 to $40,000 with a median of $8,400.
Their net worth ranged from $23,000 to over $200,000 with a median
All couples reported enough income for current needs. Forty-eight
couples indicated they had adequate provision for an extended
illness and sufficient income to visit children and relatives as often
as they wished. Forty-six couples lived close enough to their pre-retirement
level of living to please them.
Thirty-nine of the couples used a financial plan, but only five
couples had made written plans. Most couples based their financial
plan on past experiences and adjusted their plan as needs changed.
Those with a financial plan usually planned for a month or a longer
period. All couples reported some degree of flexibility in their plans.
Thirty-eight of the 45 couples who at some time had used a financial
plan felt it had been an aid to a higher level-of-living than would have
been possible without a plan.
The total expenditures of the 50 couples in 1970 ranged from
$2,695 to $20,264 with a mean of $8,287. By income level the mean
total expenditures were: $4,255 for the $5,000 or less income group;
$7,973 for the $5,001 to $10,000 group; $10,753 for the $10,001 to $15,000 group; and $13,570 for the group with income of $15,001 or
more. The expenditures represent dissavings in the two lower income
groups in decreasing amounts as income increased. Savings in the
two upper income groups increased in amounts as income increased.
The mean 1970 expenditures for all couples were: food, $1,450;
housing, $1,538; transportation, $1,213; clothing and clothing care,
$327; medical, $571; other family consumption, $1,414; gifts and
contributions, $391; life insurance, $224; and personal taxes, $1,147.
When asked about adjustments of expenditures to income, 35
couples reported they had made adjustments to increasing costs in
1970. All couples used their time, energy or skills as substitutes
for purchased services. The services performed and named in order
of frequency of substitution were: laundering, cleaning, making
minor household repairs and doing maintenance work. Ninety-eight
percent of the couples found satisfaction in performing these services.
Forty-seven of the 50 couples used credit in 1970. Credit cards
were used by 40 couples and monthly charge accounts by 24 couples.
The items most frequently purchased on credit in 1970 were gas and
oil followed by clothing and household items.
Only three couples reported financial management problems
after retirement. The problems reported were: having children in
school after retirement; selling home to buy in a more desirable neighborhood; receiving reduced income from investments; and
supporting an aged parent in a nursing home.