Transitioning into Retirement: Spending
February 13, 2025
As you approach retirement, it is essential to understand how your personal and lifestyle expenses may change. Retirement is a significant transition that brings about various financial adjustments. Here are some key areas to consider:
Housing: This is often the largest expense for retirees, regardless of whether you own your home or rent. If you have paid off your mortgage, you may have extra cash to allocate elsewhere, but do not forget to factor in property taxes, insurance, and maintenance costs. Downsizing or relocating to a more affordable area can help reduce these expenses.
A New Routine: Your daily living expenses, such as groceries, utilities, leisure, and transportation, may change during retirement. While some costs, like commuting, may decrease, others, such as utilities and groceries, may remain consistent or even increase. It is important to budget for these expenses to match your new lifestyle.
Taxes and Debt: You might not be on the clock anymore, but taxes and existing debt do not end along with your working years. Be sure to consider these when crafting a budget and – if you are still working – explore ways to decrease outstanding debt while you have more avenues for income.
Inflation: Regardless of the size of your nest egg, purchasing power will decrease with time and inflation. It may be helpful to keep a portion of your investments in assets that can outpace inflation and potentially help protect your financial standing.
Make sure you are considering all the ways your spending might change. Contact us to schedule a consultation and let a financial professional show you things you should be prepared for based on current and future plans.
https://money.usnews.com/money/retirement/articles/costs-to-include-in-your-retirement-budget