Mortgage Payments. Most retirees own a home by their retirement. Ideally, this home would be paid off or nearly paid off at retirement.
Clothing. Bermuda shorts and t-shirts cost less than business suits or other work clothes!
Taxes. With careful financial management, most retirees will pay fewer taxes during their retirement. Generally, this is because earned income is less. Attention must be given to meet guidelines on tax-qualified plan distributions.
Debt Repayment. Hopefully, you will be debt free!
Transportation. Most retirees drive less (no more commute!) and many are able to get by with one vehicle for the household.
Disability Income Insurance. Not necessary for someone retired.
Savings and Investments. You are now in the "keep it" stage as opposed to the "accumulation" stage.
The Basic Living Expenses that Generally Increase in Retirement Include:
Health Insurance. This is a main area of concern for retirees, many of whom may rely on Medicare. The cost of prescriptions, preventive care and major medical coverage increases each year faster than the general rate of inflation.
Rent. For retirees who have not purchased a home, they should factor in the increase of rental costs during retirement years. If not planned for, this could cramp your lifestyle!
Home Maintenance. If you live in a home that you have owned for many years, it is likely that maintenance costs will increase throughout your retirement.
Utilities. Utility costs can increase periodically with energy demands based on oil shortages or weather conditions.
Insurance. As the cost of autos and homes continues to increase, so does the cost of insurance.
Long-Term Care. This applies if you do not already have long-term care insurance.
Vacation/Recreation. This is one expense we want to increase!
Contributions and Gifts. Retirees tend to contribute more to charitable organizations and often make monetary gifts to children and heirs.