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Expecting Expenses To Decline In Retirement? They May Rise

While most of us think that our expenses will decline when we retire, that isn’t always the case. It may make sense logically that expenses will go down after all. You likely won’t be commuting to work, or buying work clothes or lunches out for business anymore, and in fact there may be some significant savings as well. For example, you may have paid off your mortgage so that your housing costs will be significantly reduced. However, not every retiree is the same, and for some retirees, their expenses can go up instead of down.


While it’s true that for many, a mortgage may be paid off and housing costs could decrease, there are also housing expenses that could cause increases for many retirees. In fact, T Rowe Price conducted an analysis in 2023 that found housing is the largest contributor to spending variability in retirement. This could be due to purchasing a second home, or right sizing a home just before retirement and then carrying that mortgage through retirement.

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