9 Things You'll Spend Less on in Retirement

1. You’ll spend less on commuting

Although some adults age 65 and older are unretiring and are going back to work, for many who are voluntarily signing off on their careers, saying goodbye to rush-hour traffic and long commutes is a highlight of retirement. Not only will you be spending less on gas, but you’ll also save money on vehicle maintenance, license and registration costs (or bus and rail fare).

According to the 2025 Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics (released October 2026), the average U.S. household spent $13,492 each year on transportation. That equals about $1,124 per month. This was the second-largest expenditure category after housing, accounting for 16.5% of total average spending.

That figure has risen sharply over the past decade, mainly due to increases in car insurance and rising vehicle prices. Multiply that number by two if you still have two cars in the garage. Thankfully, the long commute and gas prices don't sting as much as when you were employed.

2. You’ll spend less on clothing

If you’re still heading to the office, you’re likely spending what’s needed to look sharp at your job. In retirement, you won't need too many pressed shirts or high heels, as your wallet gets a break from updating your work wardrobe.

According to the BLS Consumer Expenditure Survey, households with a person age 65 to 74 spend an average of about $1,300 annually on apparel and services, vs. slightly more than $2,010 for all age groups.

A word of caution, though: Although household spending on apparel decreases overall in retirement, your loungewear or casual wear clothing costs might rise.

Marguerita Cheng, chief executive officer at Blue Ocean Global Wealth, says that she sees spikes in spending from recently retired clients who feel the need to update casual wardrobes in the first few years of retirement. Remember, you only need (or can wear) so many golf pants.

3. You’ll spend less on food

Even if you dream of a retirement filled with brunch dates and steak dinners (on the early bird discount, no doubt), chances are your total food bill will be lower.

That said, from 2020 to 2024, grocery prices in the U.S. shot up by 23.6%. For 2025, they increased by about 2.4%, bringing the overall upsurge to roughly 26.6% over five years. For 2026, grocery prices saw an increase of about 2.5%, bringing the overall upsurge to roughly 29.7% over six years, according to the USDA. In 2027, prices are forecast to rise again, at least another 1.7 percent.

Everyone has to eat, but with such an increase in food prices, saving on groceries becomes much harder for retirees — especially those on fixed incomes.

According to Erik Hurst and Mark Aguiar, professors from the University of Chicago and Princeton University, the logic that retirees will spend less on food is simply that retirees are more careful, price-conscious shoppers. Besides, they likely also eat less.

When you’re not in a hurry at the grocery store, you’re more likely to compare prices on similar products, use coupons and spend more time planning meals for the week ahead. You're also more likely to buy unnecessary items while walking the aisles, so keep that in mind.

They go on to say that when you’re working, much of your dining out might be quick lunch runs or costly lattes on the way to work when you’re pressed for time or not in control of the agenda. Instead of patronizing fast-food restaurants more frequently, retirees reserve their eating-out dollars for table-service restaurants (and know how to work the discounts).

4. You’ll spend less on entertainment

No 9-to-5 job commitment means lots of time for lots of fun, am I right? Not so fast. There’s a common misconception that you’ll spend more money in retirement on entertainment — concerts, movies, clogging competitions, you name it — because you have more time. But the numbers don’t back this up.

On average, retirees (age 65 and older) spend about $3,025 annually on entertainment, which might include activities such as dining out, hobbies and attending cultural events. That's according to the most recent detailed data from the Bureau of Labor Statistics (BLS) for 2024. The same survey showed that people under age 65 spent more on entertainment on average, consistent with overall 2025 household entertainment spending of $4,084 annually.

This decline likely corresponds with changes in mobility as you age, or the fact that you want to chill out after years of slogging to the office. Even if you occasionally splurge to see your favorite band, you might find yourself opting to watch Netflix instead of going out every weekend.

But be careful. Streaming services are popping up everywhere, and their layered charges for more and better options can jack up your entertainment bill. We’re looking at you, Paramount+, Discovery+, Disney+ and all your compadres.

5. Your housing costs will be cheaper

According to the most recent analyses (2024) of U.S. Census Bureau data (PDF), 36% of homeowners age 65 and older had a mortgage in 2024–2025, compared with much higher shares for younger groups.

As of 2025, about 65% of Americans owned a home, with mortgage-free homes comprising about 40% of all owner-occupied units, driven by aging demographics and higher rates among seniors.

Are you in that lucky group?

Housing costs don’t disappear entirely in retirement. Even if you’ve paid off the mortgage, you’ll still spend money on home maintenance, property taxes and utilities.

Downsizing in retirement? Consider moving costs associated with downsizing, relocating or moving into senior-living facilities.

As of 2025, Americans ages 55 to 64 spent an average of $27,019 on housing. That number drops to $22,329 for those ages 65 to 74, and to $21,999 for those 75 and older, according to the Bureau of Labor Statistics.

6. You’ll spend less on education

Education is no longer confined to traditional school-based education, but has expanded to lifelong learning for all ages. Thankfully, you can still pursue an education for little or no expense.

The average retired household (age 65 and older) also sees a big decrease in personal spending on education, with an average annual expenditure of just $429. For those ages 65 to 74, the figure is $482, according to the Bureau of Labor Statistics.

But even if you're thinking about going back to school in retirement, many colleges and universities in every state offer classes free (or nearly free) to those age 65 (in some cases, 55 to 60) and up.

Note: In calculating spending in retirement, the BLS doesn't factor in money that retirees contribute toward 529 savings plans for their grandchildren.

7. You’ll spend less on alcohol and tobacco

Many people might suppose it would be the other way around — in retirement, it’s always 5 pm.

However, according to the most recent data from the BLS Consumer Expenditure Survey and the 2025 National Survey on Drug Use and Health, people age 65 and older generally drink and smoke less than younger adults.

In 2025, cigarette use was about 8.8% for those age 65 and older, compared with higher rates among younger adults (for example, 14.1% among those 26 and older). Alcohol use is also lower among older adults than among many younger groups.

The average working household spends about $365 a year on tobacco and tobacco products, while the average retired household spends less. Spending on alcohol also decreases in retirement. According to BLS data, the average household spent $630 a year on alcoholic beverages in 2025, while households headed by someone age 65 to 74 spent $610.

People in general, and retirees specifically, are increasingly concerned about their health as health care costs rise, so cutting down on or eliminating unhealthy habits can be lifesaving. A recent Transamerica Retirement Survey shows that 75% of retirees are concerned about their health in older age, with many prioritizing being healthy and fit (67% list it among their top priorities).

8. You’ll spend less on pets and pet supplies

It’s often said that having a pet in retirement can benefit your health in big ways. A four-legged friend can provide companionship for lonely retirees and encourage regular exercise.

However, the promised perks don’t have to translate into massive spending. Working households spend an average of roughly $900–$1,000 or more each year on pets and pet supplies, while retired households (age 65 and older) spend approximately $752 on average. This might be in part due to the fact that people over the age of 65 are less likely to own a pet, with only 46% of adults 65+ having a pet compared to 64% of those aged 50–64. Of course, if you own a pet, you already know it's expensive.

9. You’ll spend less on taxes

To ease the financial burden on retirees, many states waive or lower property taxes for those older than 65 and exempt a portion of retirement income, particularly from pensions, Social Security and retirement-savings plans, from state income taxes.

These breaks come in different forms: exemptions, tax credits, deferrals, and rate freezes. Check out our articles on the most-overlooked tax breaks for retirees and people over 65, as well as our state-by-state guide to taxes on retirees.

Households with adults younger than 65 pay substantially more in personal taxes each year than retired households. Property taxes also decline with age, with households ages 55 to 64 spending an average of $3,307 annually, with the amount falling further for those ages 65 to 74 and again for those 75 and older, according to BLS data.

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