I think that people who ask that question, more often than not, feel like it is their business because they are your friend and are concerned for your future. This also gives you an opportunity to put in words what your plans are and be held accountable for them, not by the one asking, but by the universe. The only reason you would be offended or feel it is not someone's business is if you are insecure or unsure of your plans. I am happy to tell complete strangers what my complete plans are if I fully intend to execute. I don't think people are inherently trying to be nosy or offensive.
So i guess the polite thing to do is to say what is really in your intention, if it is someone you can trust i suppose. It would be rude to lie, and it would be rude to chastise someone for asking.
Honesty is the best policy, not toward them, but toward yourself.