What Are the Different Types of Retirement Expenses?

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  • Written By: A. Lyke
  • Edited By: Michelle Arevalo
  • Last Modified Date: 12 January 2020
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Retirement funds support wage earners when they stop working due to advanced age or other reasons. Many expenses for retired individuals are similar to costs for other groups. These costs usually include housing, transportation, utilities, communication, and entertainment. Some retirement expenses, such as health care, often increase as the retiree ages.

Funding for retirement can come from several sources, including company pensions, retiree savings, and government programs, like Social Security in the United States. The amount a retiree should save is contingent on projections of retirement expenses. When planning for retirement, future retirees should factor each type of expenditure into their calculations. Retirement may be relatively costly, so employers often offer workers increases in pension funds as employee benefits and rewards.

Basic life needs are necessary and unending. These retirement expenses include shelter, medical care, and food. Such costs rise throughout retirement due to inflation. Most financial planners recommend a savings plan to help ensure that retirees save enough funds to cover at least the cost of these basics, with projected inflation.

If the retiree owns her house, her housing expenses might include a mortgage, taxes, and home repair costs. Retirees living in a rental property will probably need to pay rent fees. Many elderly people eventually move to assisted living centers that provide food, shelter, and medical care in one location. Someone planning for retirement might figure in the potential cost of assisted living so that that possibility is affordable if necessary.


Optional retirement expenses could include travel or entertainment. Upon retirement, a retiree may wish to start projects or go on trips that she didn’t have time for when she was a full-time worker. Younger retirees tend to spend more on optional items and experiences, while older people may be more concerned with necessities, especially the costs of health care. Sometimes, adjusting calculations aren’t necessary because increased medical expenses replace optional costs as times goes on.

Many retired people ensure that they won't outlive their savings and pensions by spending on a budget. Financial planners often recommend that workers begin retirement planning a long time before actual retirement age. Even an employee expecting a sizable pension could realize that those funds aren’t enough once she calculates all her retirement needs and the potential length of her retirement. A worker may choose to delay retirement to ensure that she has enough money saved to ensure that all retirement expenses are covered.


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