Does Spending Increase in Retirement?

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Explore how spending patterns change in retirement and plan effectively. Discover safe money alternatives for a secure financial future. Learn more! Retirement can bring up a number of concerns, from lifestyle and health to social activeness. There’s also the issue of money. Many people worry about retirement spending, how much they need to save, and how this may affect their current money habits . In a survey by Allianz Life , nearly one-third of Americans said they are “panicked” or “very worried” about cost-of-living increases and their effects on their retirement lifestyle. 6 in 10, or 64%, said they don’t have a plan to combat rising costs of living in retirement. From the standpoint of pre-retirement preparation , this brings up an important point: Does spending tend to increase in retirement? Answering this question may play into decisions of managing expenses, controlling spending, and saving for retirement today. Compared to pre-retirement, many Americans may expect their retirement spending to go down. Having fewer or no commutes to work, children moving out, paying off debts such as a mortgage, not having to deal with a wardrobe for work… these are just a few areas in which expenses can fall. But many retirees may even see their expenses go up. Healthcare and personal care costs tend to increase sharply. Housing costs, such as home repairs or a roof replacement, may arise if you continue to live in the same place for years. Then there’s time – simply much more time for people to do things and spend money. So, while there’s no ballpark answer, it’s important to have some idea of potential retirement spending. Here’s a quick look at some data findings and other helpful insights. What Does Spending Data Show? To get a gander of what pre-retirement and post-retirement spending may look like, we turned to government data. The Consumer Expenditure Survey, put out by the Bureau of Labor Statistics, offers insights into spending patterns across age groups. Yes, these figures aren’t adjusted for inflation. But they do show how consumer spending can vary, even widely, by demographics. This graph looks at spending patterns across these age groups, over a 20-year stretch from 1996-2016: Consumers aged 25-34 Consumers aged 35-44 Consumers ages 45-54 Consumer