8 Expenses That Add Up To $2,000 a Month After You Retire
Written by
Jordan Rosenfeld
Edited by
Angela Corry
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Retirement seems like a time when all expenses should go down, considering retirees aren’t commuting and have fewer daily obligations. But for many retirees, new costs emerge, old ones evolve and some expenses can surprise them.
To understand where that money goes, experts break down the most common expenses that tend to rise after people stop working.
1. Healthcare And Medicare Costs Add Up
As we age, healthcare costs become a larger percentage of expenses, said Aviva Pinto, a financial analyst and managing director at Wealthspire, making this a compounding burden over time.
While Medicare may lower healthcare costs, it isn’t free, warned Taylor Kovar, a CFP and the CEO and owner of 11 Financial. “Once you layer in supplemental plans, prescriptions and out-of-pocket costs, it can be a few hundred to over a thousand dollars a month depending on the situation.”
2. Travel And Leisure Spending Surge
With more free time comes more opportunities, and more spending around areas like travel, dining and hobbies.
“People finally have the time to do the things they’ve been putting off for thirty years, and that comes with a price tag,” Kovar said.
Sarah Nadler, money coach, founder and CEO of FierceFeminineFinance.com, calls this “time-rich spending.” Problems occur when the retiree hasn’t budgeted for this extra spending.
3. Housing Costs Persist–Even Without A Mortgage
A paid off home doesn’t mean housing is free. Kovar noted that “Property taxes, insurance, maintenance, repairs … those costs actually go up as homes age.”
Additionally, being at home more often increases utility usage, as you heat and cool your home more often than when you were away at work, Pinto said.
4. Insurance Costs And Long-Term Care Planning
Insurance and long-term care can expand in retirement, Pinto said.
Long-term care in particular can become a major expense later in life, often requiring separate planning and funding. According to the U.S. Department of Health and Human Services, many Americans will need some form of long-term care, which can cost thousands per month depending on care type and location.
5. Helping Family And Gifting
Many retirees find themselves financially supporting adult children or grandchildren, which can significantly impact monthly budgets by hundreds of dollars each month, Kovar said.
While family togetherness and gifts can create wonderful feelings of connection, retirees need to be sure they’re working within their budget to protect their nest egg.
6. Everyday “Small” Expenses
Smaller recurring costs can also collectively add hundreds per month, Kovar said. “Subscriptions, eating out more … none of those feel big on their own, but when you’re no longer earning a paycheck, they stand out a lot more.”
There’s also often a “subtle shift toward convenience with more paid services, upgraded experiences, and a desire for ease after decades of working,” Nadler said, which can normalize higher spending.
7. Taxes On Withdrawals
Retirees have to account for “the taxes they will have to pay on withdrawals (and required minimum distributions) from retirement plans,” Pinto said.
Withdrawing from the wrong accounts at the wrong time can increase tax liability and accelerate how quickly assets are depleted, making tax planning a critical part of managing monthly costs.
8. Inflation Steadily Raises Costs
Though not technically an expense, inflation can significantly increase costs over the long term and it’s all but guaranteed to go up.
“Inflation is a slow drip, but it adds up,” Kovar said. “What feels manageable at 65 may look very different at 75 or 80.”
Even at a modest 3% inflation rate, Nadler warned that expenses can double over a 20-to-25-year retirement. Failing to account for inflation can erode purchasing power and strain savings.
Retirement doesn’t automatically mean spending less — it often means spending differently.
More From GOBankingRates
