Same Self, Different Habits: How Household Spending Changes During Retirement

Entering the retirement phase of life is a significant change for many people. From a financial standpoint, some things don’t change while others change dramatically. Your household budgeting plan manages to be both at the same time. You still need a budget, but the budget will look quite different.

Your budget, usually created within a monthly timeframe, provides your household a framework to live within its means and keep expenses reasonable. Yes, you will still maintain a budget during retirement, and while household budgets include income and expenses, let’s focus specifically on expenses. How might your expenses change during retirement

Compared to your pre-retirement spending habits, your retirement years can see certain expenses go up, down, or remain relatively unchanged. While each person’s household has unique spending habits, here’s how things might change during retirement:


Not working usually means less time in the car, less time in traffic, and less money for gasoline.

Payroll taxes
If you have no pay, you have no payroll taxes.

Retirement contributions
Once you’ve retired, you are spending your retirement savings, not contributing to them.

Your home mortgage is likely paid off or you may have downsized your home. Either way, your housing expenses are likely to be reduced.

Income taxes
During your working years, income taxes were largely a byproduct of your earnings. In other words, income taxes were largely out of your control. During retirement, you have more discretion with your income. For example, you take distributions from your IRA only when you need the money. Tax-efficient strategies become more feasible during retirement.


Yes, Medicare does kick in at age 65, but this does not mean that your medical expenses are now free. Small premiums might need to be paid. Chronic , health problems become more acute and sometimes more expensive, with increasing age.

Leisure and travel
The dream vacation. The boat. The round of golf at a legendary course. You’ve worked so hard and want to enjoy retirement, but big-ticket items can increase expenses quite a bit.

These guidelines are certainly not true for all retirees, nor is it a complete list, but it’s still wise to consider what your retirement expenses will look like. It’s an easy consideration that will help ensure your retirement years are as stress-free as possible.

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.

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