RETIREMENT DECISIONS THAT ARE HARDER THAN THEY LOOK
HOW MUCH SHOULD YOU PLAN
TO SPEND IN RETIREMENT?
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Sandy Hornor | CEPS
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Tessa Hall
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About This Episode
Will you really spend less after you retire? While some expenses may disappear, retirement can introduce new costs and more opportunities to spend on travel, hobbies, and other experiences.
In Episode 2 of Retirement Decisions That Are Harder Than They Look, Tessa Hall speaks with Sandy Hornor, CEPS, Managing Director, Wealth Management & Executive Manager at BWFA, about creating a realistic retirement budget. They discuss why spending may remain similar to pre-retirement levels or even increase, particularly during the early years of retirement.
Sandy also explains how expenses can change throughout retirement and why healthcare, taxes, home modifications, and lifestyle choices should be considered when determining how much income your retirement plan may need to provide.
Discover how BWFA can help you plan for your financial future by visiting our Financial Planning page.
Frequently Asked Questions About Spending in Retirement
Do people spend less in retirement?
Not necessarily. Sandy explains that many retirees spend roughly as much as they did while working, and some spend more, particularly during the active early years of retirement. Travel, hobbies, and having more free time can all create additional opportunities to spend.
What expenses may decrease when you retire?
Some major expenses may decrease or disappear by retirement. Depending on the retiree’s circumstances, these can include college tuition, mortgage payments, and certain work-related expenses. However, lower spending in one category does not necessarily mean total retirement spending will decline.
What expenses can increase during retirement?
Travel, healthcare, taxes, and home modifications can increase retirement expenses. Sandy discusses costs such as healthcare premiums, taxes associated with required minimum distributions, and renovations that may make a home more suitable for aging in place.
How should you budget for retirement expenses?
A retirement budget should start with realistic spending assumptions rather than automatically assuming expenses will decrease. Sandy recommends considering how spending needs compare with income available from Social Security, pensions, investments, rental property, and other retirement income sources.
Does spending stay the same throughout retirement?
No. Retirement spending can change as your lifestyle and needs evolve. Sandy describes retirement in three general stages: “go-go,” “slow-go,” and “no-go.” Early retirement may involve more spending on travel and activities, while later years may involve less discretionary spending but potentially greater healthcare needs.
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