Do you often fret about not having enough cash in retirement? You might be surprised to see some of the things you’ll find yourself spending less on as you enjoy your golden years. Booze, for one.
The newly released 2026 Planning & Progress Study by Northwestern Mutual shows a growing sense of financial security across every generation. While the official “magic number” for a comfortable retirement in 2026 won’t be available until later this year, recent trends are encouraging.
In 2025, that target dropped to $1.26 million, a significant $200,000 decrease from the $1.46 million reported in 2024. While the bar is lowering, this seven-figure goal remains a daunting hurdle for millions of Americans.
According to Clever Real Estate’s 2026 Retirement Statistics Report, retirees believe they will need an average of $823,800 in savings and investments for a comfortable retirement. Bankrate’s 2025 Retirement Savings Report, released in October 2025, reveals that about one-third (34%) of workers think they’ll need more than $1 million. This coincides with Betterment’s Retirement Readiness Report, which showed 48% of U.S. workers said they’d need at least $1 million.
Facing such seemingly overwhelming goals, 52% of non-retired middle-class Americans expect to retire after age 65 or not at all, per a 2025 Transamerica report.
Consumer spending decreases significantly as you age. To know how much you need to save for retirement, it’s important to know what your spending will look like once you retire. Consider these nine budget-line items you’ll likely spend less on in retirement, then check out our companion article on Nine Things You’ll Spend More on in Retirement.
1. You’ll spend less on commuting
Although some adults age 65 and older are unretiring and 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, you’ll also save money on vehicle maintenance, license and registration costs (or bus and rail fare).
In 2024 (the most recent data), households spent a yearly average of $9,538 on transportation costs, including a vehicle, insurance, and gas, according to the Federal Reserve Bank.
According to a 2025 article by MSN, these costs averaged about $1,098 per month and were the second-biggest drain on budgets.
That figure has risen sharply in 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 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 $2,000 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, the 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, of course), 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, projections estimate an increase of about 2.5%, bringing the overall upsurge to roughly 29.7% over six years, according to the USDA.
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, it’s true they’ll 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 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 spend about $3,000 to $4,000 annually on entertainment, which might include activities such as dining out, hobbies and attending cultural events. That’s according to the most recent data from the Bureau of Labor Statistics (BLS). The same survey showed that people under age 65 spent an average of $4,297 annually on entertainment ($358/month).
This decline likely corresponds with changes in mobility as you age, o r 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.
In 2024, the share of owning outright reached about 64%, with mortgage-free homes comprising nearly 40% of all owner-occupied units overall, 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.
The average annual spending on housing for Americans ages 55 to 64 is $27,019. It decreases to $22,329 for those ages 65 to 74, and it drops further to $21,999 for those 75 and older, according to the Federal Reserve.
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 also sees a big decrease in personal spending on education, with an average annual expenditure of just $373. Even if you’re thinking about going back to school in retirement, many colleges and universities in every state offer classes free (or nearly so) 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, 2024, people age 65 and older generally drink and smoke less than younger adults.
In 2024, 65% of those 65-plus reported past-month alcohol use, vs 47% for 18 to 34 year-olds. Cigarette use was about 8% to 10% for those age 65 and older vs 14.9% for people ages 35 to 64.
The average working household spends $352 a year on tobacco and tobacco products, while the average retired household spends $261 a year, about $100 less. Spending on alcohol also decreases in retirement. According to BLS data, the average working family spends $643 a year on alcoholic beverages, while the average retired family spends $469 a year.
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 (PDF) shows that 75% of retirees are increasingly concerned about health in older age, with many prioritizing being healthy and fit.
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 $934 each year on pets and pet supplies, while retired households spend approximately $749 on average.
The BLS says that having children, particularly older children at home, increases household spending on pets. Check out our article on what it really costs to own a dog or cat to learn more.
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 in which adults are younger than 65 spend $13,605 annually on personal taxes, compared with $3,466 for retired households. Additionally, households in which adults are 55 to 64 spend an average of $3,072 each year on property taxes.
This number declines to $2,808 for households in which adults are 65 to 75 and $2,408 in households in which adults are 75 and older, per BLS data.
