How Retirement Spending Changes Over Time

People that are nearing retirement or new retirees can often worry that they are spending too much, too soon. Should they scale back? Are they at risk of outliving their money? Or the opposite can be true, where people are very conservative with their spending and wait until it’s ‘too late’ to experience all that retirement has to offer.

This concern may be legitimate if you are not following an established financial plan. However, every retirement journey looks different depending on a person’s lifestyle, desired standard of living, and things they want to accomplish while in retirement.

While we don’t know your exact situation, in this blog, we will cover some of the general trends we see in retirement spending and things you should consider as you plan for what you want your retirement to look like.

By the Numbers

In a 2025 study by Northwestern Mutual, American’s average ‘magic number’ to retire was $1.26M, but 54% of Gen Xer’s who are nearing the age of retirement believe they will not be financially prepared when that time comes. Additionally, 56% of Gen X believe they could outlive their retirement savings.

So, what are the numbers telling us? Either nearly half of people are not saving enough in retirement, or we have an inflated number of what we actually need to retire.

Most financial planners would suggest that you need approximately 70-80% of your pre-retirement yearly salary to maintain your lifestyle in retirement. This rule of thumb accounts for the fact that some expenses will be reduced or eliminated. To get a more accurate outlook for your own lifestyle, you can:

• Track current expenses: Take a comprehensive look at your current spending. Categorize your expenses into needs, wants, and savings/debt repayment.

• Adjust for retirement: Identify expenses in your current lifestyle that will decrease or be eliminated once you retire, such as commuting costs, work attire, or office lunches. Conversely, add expected new expenses, like increased leisurely travel or healthcare costs.

• Account for inflation: A retirement savings plan must take into account the rising cost of goods and services over time.

The points above are great for getting a general outlook on your retirement. However, what it doesn’t account for is the fluctuations you can see in your spending as you move from early, mid-to late retirement.

Spending Patterns

Retirement can have many different life stages within it, like supporting or helping raise grandchildren, traveling, discovering new hobbies, supporting aging parents, siblings, or significant others. And these different stages will affect your spending patterns over the years.

Here are some areas of consideration and how spending patterns can change within them:

Home: Key considerations here are to think about if you plan to pay off your home (if it isn’t already) and remain in that home, downsize, upgrade, or get a seasonal home? Your home is one of your largest assets, and having a general idea of the future of this asset allows you to build your other savings around this.

Travel and entertainment: An important area to consider is the lifestyle changes you plan to make during retirement. Are you planning to travel more than you currently do? If so, where are places on your bucket list; nationally or internationally?

Generally, people tend to do the most travelling early on in their retirement when you have more energy, better health, etc. In that case, you could plan to decrease your budget for travel as you get older. Along those same lines, we often see other entertainment or luxury expenses decline as people age, such as concerts, sporting events, or clothing.

Healthcare: No one knows for certain what your health care costs will look like from your 60s to your 90s.  On average, according to the 2025 Fidelity Retiree Health Care Cost Estimate, a 65-year-old individual may need $172,500 in after-tax savings to cover health care expenses in retirement.

Consider some of your pre-existing factors. Do you have medical care costs currently that are expected to stay the same or increase with time? Do you have a strong family history of conditions that could increase your health and longevity?

Planning for Your Envisioned Future

So, how much should you plan to save for retirement?

While there are countless reports that will give you a ‘magic number’ for how much you need to retire, in reality, the amount you should save depends on the personal choices you envision for yourself in retirement. There is no one right answer for everyone.

A carefully designed strategy can help you be prepared, and that is where Advance Capital Management is here to help. Our advisers will first understand your vision for retirement and then help you determine how you can get there.

If you’re nearing retirement and would like to get an estimate of your retirement savings needs, click here to get connected with one of our advisers.