Picture this: You’re two or three years into retirement, settling into your new lifestyle. Maybe you’re planning that national parks road trip, or you’re finally ready to tackle replacing the deck. But when you check your bank accounts, you start to worry about where all your money is going.
You thought your spending would slow down in retirement, but your living expenses keep creeping up. Your property taxes and insurance premiums have jumped. The cost of food at the grocery is climbing each visit. You’re starting to feel guilty about your spending, wondering if you need to cut out the things like traveling or that weekly restaurant dinner with the grandkids. And now you’re typing into Google, “How do I reduce expenses in retirement?”
This is a frustrating and common scenario, even if you’ve worked hard and saved diligently. You are not looking for a flashy or complicated lifestyle. You just want the peace of mind knowing that your retirement savings will last and that your retirement income will be enough to enjoy life.
The secret to that peace of mind lies in aligning your spending with your values. This article will help you refine your confident retirement plan by showing you smart, tactical ways to reduce expenses that don’t matter to you, allowing you to maximize your retirement income and spend guilt-free on the things that really do.
Key Takeaways
- Mindful spending creates freedom: Being intentional with your money isn’t about giving up the things you love. It’s about confidently spending on what truly matters to you while reducing costs in areas that don’t.
- Small changes make a big impact: Proactively trimming even small expenses can lead to significant savings over time. These little adjustments can add up, giving you more retirement income to work with.
- Data is your guide, not your judge: Before you cut any spending, take a clear look at where your money is going. This information gives you the power to make smart decisions and spend without guilt.
Why Being Intentional with Your Spending Matters in Retirement
Many people assume their spending will naturally drop once they stop working. In some ways, this can be true! You might spend less on commuting, work clothes, and lunches out with colleagues.
But we often see our new retiree clients are surprised when other costs, like travel and hobbies, actually increase. You might also find yourself paying more for unexpected expenses like healthcare premiums and medicine costs when your employer insurance ends. Being proactive with your retirement budget helps you plan for this reality so you’re not caught off guard.
Before You Cut, Get Clear
Some of the families we work with share that they feel a sense of guilt when they spend money in retirement. Usually, their first instinct is to tell us they need to cut things like dining out, even when they have plenty of money to support their ideal lifestyle.
Before you reach for the scissors, instead consider grabbing a magnifying glass to get a clear picture of your real living expenses. It’s hard to make smart spending choices until you know exactly where your money is going today. Once you know how much you really spend, then you can compare it to your available retirement income to determine if cuts are necessary.
Getting clear on your retirement budget isn’t about shaming yourself; it’s about giving yourself the freedom and permission to spend without guilt on the things that truly matter to you. Once you have a clear picture, the tips below become a powerful toolkit for making intentional decisions.
Fixed Income + Longer Lifespans = More Pressure
Moving from a steady paycheck to a retirement fixed income can feel scary. You’ve spent your life watching your accounts grow, and now you are suddenly seeing them decrease as you take withdrawals.
People are also living longer in retirement than ever before. A recent article by GoBankingRates found that since 1970, the length of retirement for men and women has increased by approximately 50%. The longer you live, the more you’ll need in retirement savings if you want to feel comfortable spending your money.
Small Proactive Adjustments Can Add Up Over Time
Having a proactive retirement budget isn’t about living without things you love. It’s about being more mindful and intentional with where your money goes. Think about it: a small, everyday expense can add up to real money over the course of a year. Baby steps can add up to significant savings and allow you to maximize your retirement income.
The key to making small spending changes is to be proactive. This means deciding where your retirement savings should go ahead of time instead of hoping for leftover money at the end of the month. Proactive adjustments could include canceling a few old subscriptions you don’t use or setting up a small monthly auto savings for holiday gifts to avoid stress at year end.
Example: $50 per month saved could be $600 sitting in your bank ready to go for buying holiday gifts come December. Imagine having money set aside for holiday gifts, instead of wondering which credit card to use.
What Are 15 Smart Ways to Cut Costs in Retirement?
Here are some smart ways we help the families we work with to maximize their retirement income and savings. We’ve found that being intentional with these expenses allows them to enjoy a confident retirement without guilt.
1. Downsize or Relocate
Your home is likely one of your largest out-of-pocket living expenses. A recent Motley Fool article states that the average US Housing cost as of 2023 was approximately $25,000 per year or $2,100 per month.
Your city or state could also make a big difference in what you pay for housing and property taxes. In 2025, Zillow states that the average house value in California is $813,110 compared to the average house value in Ohio of $245,994. Downsizing to a smaller home or moving to a less expensive area could potentially reduce your housing costs, property taxes, and maintenance expenses.
For example, let’s say your home is worth $450,000 and you still owe $100,000. If your home is much bigger than you need at this stage of life, you might be able to find a smaller, less expensive home to eliminate some or all of that remaining debt and interest.
For our clients here in Southern Ohio, this can be a powerful strategy. For example, we worked with a couple in Centerville who were living in a home that was much bigger than they needed. By downsizing to a new home in a smaller, more walkable community, they were able to reduce their remaining mortgage and free up a significant portion of their monthly cash flow for travel and dining out.
2. Cut Utility Bills
You can make simple changes to potentially lower your utility costs, like:
- Using a smart thermostat
- Weatherproofing your doors and windows
- Switching to LED lightbulbs
- Shopping around for better rates on your internet services
- Cutting cable tv services if you have a high-definition tv antenna or streaming subscriptions
- Contacting your electric and gas providers to see if you have access to a provider choice program (Ohio Electric Choice Example)
- Switching high cost cell phone plan providers if you’ve paid off your original phone cost
3. Drive Less and Keep Your Vehicles Longer
Transportation costs can take a big bite out of your retirement income, especially if you have car debt. In 2023, the average household spent approximately $13,174 on transportation costs according to the Bureau of Labor Statistics. The majority of this cost comes from car payments and interest costs.
One of the best parts of retirement is not having a daily commute. You can take advantage of this and save money on gas and vehicle maintenance. Less driving means you have the ability to keep cars longer, maximizing your retirement income budget by having no car payment more of the time.
4. Annually Shop Insurance & Medicare
Home & Auto Insurance premiums tend to creep up over time, especially for existing customers. In fact, a CNBC article states that homeowners insurance rates have increased 24% from 2021 to 2024.
Consider making it a habit to shop around for new rates on your car insurance, homeowners insurance at least once a year and get multiple quotes. Sometimes your existing carrier can re-write a policy to lower your premium. In other cases, new customer rates at another insurance carrier might offer significant savings.
Healthcare expenses are often one of the largest and most unpredictable retirement expenses. Fidelity’s 2025 Retiree Health Care Cost Estimate found that a 65-year-old couple retiring today can expect to spend an average of $344,000 on healthcare costs throughout their retirement.
Consider reviewing your Medicare and other health insurance plans annually to help you avoid overpaying. For example, maybe you signed up for a Medicare supplement but your health has been great and you are paying a lot more than you need to in premiums.
5. Eat Out Less, Cook More
If you love eating at exciting restaurants, and you have the income to support it, don’t stop. However, if your budget is feeling tight you could consider making delicious, home cooked meals more often.
According to a study by Top Nutrition Coaching, the average home cooked meal costs around $4, while an average meal out can cost around $16. For a retired couple, that might mean between $30-$50 per meal at an average restaurant, whereas a cooked meal might cost $8 in grocery items.
6. Stay Healthy to Prevent Costly Illness
While not a direct and immediate savings, staying active and eating a balanced diet is good for both your physical health and your financial well-being. By preventing chronic conditions, you might be able to reduce your healthcare expenses down the road while boosting your quality of life. Less spending on avoidable health conditions means more time to save for future healthcare expenses.
7. Audit Your Unused Subscriptions
When was the last time that you took a close look at your bank and credit card statements to find recurring charges for subscriptions? You might be surprised to find you are paying for services you never use.
Maybe you signed up for Netflix, Hulu, and HBO years ago and you can’t remember the last time you watched a show. Canceling even just a few of these discretionary expenses can result in significant savings over time.
8. Find Free or Low-Cost Entertainment
The average American household spends around $303 per month on entertainment discretionary expenses. If your retirement budget is feeling tight, you don’t have to give up fun, but you can be more intentional. Example ideas include:
- Your local library for books, movies, music, and more
- Community concerts
- Local parks for hiking and biking
- Museums
- Local school and university sporting events
9. Pay Down High-Interest Debt
High-interest debt, like credit cards, can be a major drag on your retirement income. Paying these off as quickly as possible can free up a substantial amount of your monthly income, giving you more flexibility and peace of mind.
Additionally, getting rid of your mortgage payments and car payments early in retirement can also be a huge help. For ideas on how to eliminate debt to maximize your retirement budget, check out our recent article.
10. Save Up and Pay Cash For Large Purchases
When you need to make a large purchase, like a vehicle, you have a choice: save up to pay cash or finance it. According to Nerdwallet, in 2025, the average car loan interest rate varies between 5-6% for individuals with the best credit score. Saving up is a simple, proactive way to keep more money in your pocket by avoiding these interest costs.
Example: If you finance a $25,000 vehicle at 5% for 72 months, the monthly payment would be about $403. The total cost of the car would be $29,016, meaning you paid an extra $4,016 just for the convenience of borrowing.
The key to putting yourself in a position to pay cash for large expenses is to set up automatic monthly savings at your bank. Lets assume you financed the car mentioned above at $403 monthly. Once that car is paid off, if you start to bank that $403 each month into a savings account, you’d have $24,000 ready for your next car purchase in about 5 years.
11. Reducing Bank and Unnecessary Investment Fees
Bank and investment fees can silently eat away at your retirement savings. Review your bank accounts for extra charges, like:
- Savings account transfer fees
- Checking and savings account fees for low balances
- Credit card annual fees for rewards programs you don’t use
On the investment side, be sure to look at your mutual fund holdings to see if you have funds with high expense ratios. You might be paying thousands of dollars in hidden fees to investment companies just to hold their investments, when lower-cost alternatives would work just as well.
Example: If you own a large-cap stock mutual fund with an expense ratio of .85% worth $250,000, you would be paying $2,125 in yearly expense ratio fees to the fund company just to hold the investment. You might be able to swap to a low cost index fund with an expense ratio as low as .04% instead, saving you $2,025 or more per year.
Also consider working with a fee-only financial advisor who is transparent about their fees and works in your best interest.
12. Travel Smart
If travel is part of your ideal retirement, you can still save money while enjoying your freedom. Now that you aren’t constrained by a work schedule, consider:
- Traveling during the off-season
- Booking trips well in advance
- Looking for senior discounts
Additionally, taking shorter, more frequent trips might be more affordable than a single, big-ticket vacation. The Dollar Flight Club cites that the average hotel savings of booking off-season travel is 30% while flight costs can be discounted up to 50%.
13. Use Senior Discounts and Benefits
Whether it’s groceries, clothing, movie tickets, travel, or gym memberships, many businesses offer senior discounts. It never hurts to ask! For example, according to Senior Living, Kohls offers a 15% senior discount on certain days of the week. Also, membership organizations like AARP also provide benefits and deals that can help you save money on everyday purchases.
For a great list of current senior discounts, check out this article by Senior Living.
14. Declutter and Sell Unused Items
Decluttering can be a great way to simplify your life in retirement and make some extra cash on the side. Consider selling items you no longer use, such as old furniture or collectibles. While you need to be cautious about scams, it’s relatively easy to use tools like Facebook Marketplace to offload your unwanted items for cash. You could use these proceeds to pad your retirement savings or pay cash for larger ticket items you’ve been saving for, like a new car.
15. Avoid Overpaying on Taxes
Taxes are another significant savings expense in retirement. Working with a fee-only financial advisor and a tax professional can help you to develop a tax-efficient retirement strategy. They can assist you with things like:
- Determining the best withdrawal strategy to maximize your retirement savings and reduce your taxes
- Capitalize on opportunities like tax-loss harvesting and Roth conversions
- Reduce the potential tax burden to your heirs in your estate plan
- And more…
Final Thoughts: Living Well Doesn’t Mean Spending More
A great retirement plan can allow you to comfortably live your ideal lifestyle without feeling like you are pinching pennies. We regularly encourage our clients to spend confidently on the things that matter most to them while being smart and frugal with the things that don’t matter.
By being intentional with your spending and making a few small adjustments to your retirement budget, you can feel confident that you have everything set up correctly.
Want a Less Complicated Retirement? Connect with Stage Ready Financial Planning Today for Your Free, No-Commitment Consultation.
Figuring out how to make your retirement savings last can feel overwhelming and scary. At Stage Ready Financial Planning, we specialize in helping people just like you—folks who have worked hard and saved diligently and now want a clear path forward. We can help you review your current living expenses, create a sustainable retirement budget, and make sure your retirement plan and retirement savings are set up to support the lifestyle you’ve always envisioned. Schedule your complimentary intro call today!
FAQs
How to cut expenses when you retire?
The best way to cut expenses in retirement is to start with a budget that prioritizes the things you want to be spending your money on. If you decide where you want your money to go, you can then find opportunities to make small, intentional changes for the things you don’t care about. When you are looking to trim, consider looking at your big-ticket living expenses first, like housing costs and transportation costs. Once you’ve done that, don’t forget about the smaller, recurring discretionary expenses like your old subscriptions.
What is the biggest expense for most retirees?
Studies consistently show that of the major living expenses in retirement, your housing costs, healthcare costs, and taxes tend to be the most expensive.
What expenses don’t go away in retirement?
Most of your regular living expenses won’t disappear in retirement. Some expenses might go down, like travel and commute costs to work or pet daycare. Other things like housing costs (such as mortgage payments or property taxes), healthcare expenses and health insurance premiums, utilities, and food will still be there. While you may be able to reduce these costs, they will almost always be part of your retirement spending. For example, you could pay off your mortgage or car loan, but you will still have utility costs, property taxes, car repairs, auto gas, etc.
How much do most retirees live on per month?
A recent Investopedia article states that the average retired household in the U.S. spends approximately $5,000 per month on living expenses, including housing, healthcare, food, and transportation. The amount you can live on as a retiree varies greatly depending on your lifestyle, location, and retirement savings. What matters most is creating a retirement budget that works for your goals.
About the Author
Joseph A. Eck, CFP® is the owner of Stage Ready Financial Planning, a fee-only Registered Investment Advisor based in Dayton, Ohio. As a CERTIFIED FINANCIAL PLANNER™ professional, he specializes in helping individuals and couples over 50 prepare for and navigate a confident retirement. Joseph founded Stage Ready Financial Planning to provide a different kind of financial guidance—one that is both professional and deeply personal. His philosophy is based on the belief that feeling financially prepared and confident is the key to living the retirement you’ve always envisioned.
Article References
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This communication is for informational purposes only and is not intended as investment, tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This communication should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results.