7.2.7 Spending money in retirement
Some reasons why spending in retirement might differ from pre-retirement spending:
- By retirement, most homeowners will have finished paying off any mortgage, so the amount that these pensioners spend on housing may fall.
- Pensioners often spend more time at home, so bills for gas and electricity could rise.
- There will be savings on work-related costs such as pension contributions and commuting.
- There may be an increase in travel to see friends and relatives, but pensioners often qualify for reduced-rate or free travel, especially on public transport.
- Pensioners may spend more on holidays, especially in early retirement, but may save money by going away at off-peak times.
- In later retirement particularly, pensioners may have to spend significantly more on health-related items such as help with personal care.
Think about your own current spending. How do you think your own spending might change when you reach retirement (or, if you are already retired, over the next ten years)?
Your spending could change for reasons of both necessity and choice, as you saw in the list. One thing to remember is that these are only estimates – no one can be sure of the spending they will need to undertake in retirement, because personal circumstances at the time may differ from those anticipated beforehand.