Source: Dr. Mike Walden, NCSU COLLEGE OF AG & LIFE SCIENCES, 11/2/11
 

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N.C. State University economist Mike Walden and his wife, Mary, are both considered senior citizens. The economist explains how their expenses will change once they retire.

“Of course, everyone’s different. Some folks are going to continue spending like they did … when working. Some will increase. Some will decrease. On average though, what studies show is that people, when they retire, expect to spend a little bit less. And they, they gauge their, their personal economy for that.

“One reason why they expect to spend less is housing. And of course housing is a big expense for most families. When a couple, for example, retires, they don’t have children around. They maybe are not able to do yard work anymore. Oftentimes that retired couple will reduce the size of their home and move to a less expensive location. Maybe when they were working they wanted to be close to their work. Real estate costs more there. Now they can afford actually to move away and save on the value of the land.

“So housing is one area where retired folks tend to cut their expenses. Also, work-related expenses — like clothes, commuting, eating out — those can all be cut. Sometimes households will cut back … on entertainment as a way to become more frugal.

“One expense though … that retired folks definitely see go up is health care. But the bottom line here is, before you retire — optimally you want to do this before you retire — you really need to put some, some pencil to paper and really try to figure out what will your expenses be.

“And obviously then make sure that you’ve got enough income coming in from Social Security and pensions to cover those expenses.”