Most of us picture retirement as one long chapter. But the money side of it shifts quite a bit as the years go on. What you spend at 65 often looks very different from what you spend at 80.
Two certified financial planners broke down what tends to happen, and their answers might surprise you.
What Usually Goes Down After 75
Travel tops the list. According to Adam Spiegelman, CFP and founder of Spiegelman Wealth Management, it is the single biggest expense that drops for most retirees past 75.
“Travel is by far the most significant expense that decreases for most retirees after 75. People slow down for a variety of reasons, physical frailty, loss of interest, or simply feeling they’ve seen everything they wanted to see.”
Jason Dall’Acqua, CFP and founder of Crest Wealth Advisors, adds that transportation costs (gas and car maintenance) also tend to fall. So do entertainment and shopping.
What Stays About the Same
Some costs simply do not go away. Property taxes, homeowner’s insurance, and rent do not care how old you are. Dall’Acqua points out that these housing costs keep coming regardless of where you live.
And if you are thinking about downsizing to cut costs, Spiegelman urges caution. Buying a new home at today’s prices, with today’s interest rates and a fresh property tax assessment, can actually cost more than staying where you are.
Day-to-day expenses like food, utilities, and basic services stick around too.
What Climbs After 75
Here is where retirees often get caught off guard. Healthcare costs can be high, and Medicare does not cover everything.
Spiegelman notes that a couple could easily pay $1,500 to $2,000 per month or more just for healthcare coverage. And those costs can grow. As required minimum distributions increase, they push your income higher. That can trigger IRMAA surcharges, which can substantially raise your Medicare costs.
Long-term care is the biggest wildcard of all. Informal in-home help can run $35 to $45 per hour. Around-the-clock care can cost tens of thousands. Dall’Acqua points out that more than 50% of people will need some level of care during their lifetime.
A few other costs that can quietly rise: dining out tends to increase as cooking becomes harder. Caregiver costs can become a major budget item. And Spiegelman notes that charitable giving often goes up in later life as well.
The Right Time to Plan Is Now
Both advisors agree on one thing: waiting until 75 to think about any of this is too late.
“Honestly, if you’re waiting until 75 to adjust your budget, it’s largely too late. These conversations and plans should have been happening twenty, thirty, even forty years earlier.”
Spiegelman recommends saving up to 20% of your gross income, running the real numbers on what care might cost, and building that into your long-term financial plan now.
Dall’Acqua offers a more encouraging angle. If you plan ahead for the expenses that will eventually drop, you may feel comfortable spending more in the early years of retirement, when you have the energy and health to enjoy it most.
That is a pretty good reason to sit down with your numbers sooner rather than later.