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John F. O'Hara

John F. O'Hara
731 W Skippack Pike  Blue Bell  PA 19422
Phone:  610-277-4060
Office:  215-643-3200
Cell:  267-481-1786
Fax:  267-354-6973

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How Household Spending Changes in Retirement

November 20, 2015 1:03 am

On average, households spend less once they retire—but not all households, and not in the same ways, report analysts at the Employee Benefit Research Institute (EBRI). In fact, according to a recent EBRI study, nearly half of retired households actually spent more than they did just before retirement. That spending, however, declines over time—by the sixth year of retirement, just a third spend more than they did pre-retirement.

“We also found that households that spent more in the first two years of retirement were not exclusively high-income households,” says Sudipto Banerjee, research associate at EBRI and author of the report. “Rather, they were distributed across all income levels.”

Furthermore, the median household had a home mortgage payment before retirement, but none after, indicating paying off a mortgage could be a factor in the timing of retirement, according to the study.

Other findings include:

• In the first two years of retirement, median household spending dropped by 5.5 percent from pre-retirement spending levels, and by 12.5 percent by the fourth year of retirement. The spending reduction slowed down after the fourth year. 

• In the first two years of retirement, two in five households (39.3 percent) spent less than 80 percent of their pre-retirement spending. By the sixth year of retirement, a majority (53.1 percent) of households did so. 

• In the first two years of retirement, 28.0 percent of households spent more than 120 percent of their pre-retirement spending. By the sixth year of retirement, 23.4 percent of households still did so.

Source: EBRI

Published with permission from RISMedia.


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Mortgage Rates Hold Steady

November 20, 2015 1:03 am

Average fixed mortgage rates remain largely unchanged as analyst expectations turned from world events to the Federal Open Market Committee’s (FOMC) October minutes, Freddie Mac recently reported. According to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®), the 30-year fixed-rate mortgage (FRM) averaged 3.97 percent with an average 0.6 point; the 15-year FRM averaged 3.18 percent with an average 0.5 point.

"Treasury yields stabilized about 5 basis points below last week's level as the market shrugged off economic data and world events and turned its attention to the minutes of the October FOMC meeting,” says Freddie Mac Chief Economist Sean Becketti. “In response, the 30-year mortgage rate ticked down a basis point to 3.97 percent. The FOMC minutes were couched in careful Fed-speak, and early market reaction was mixed, with most analysts reading their own expectations into the minutes."

Additionally, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.98 percent with an average 0.5 point, and the 1-year Treasury-indexed ARM averaged 2.64 percent with an average 0.3 point.

Source: Freddie Mac

Published with permission from RISMedia.


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