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11 Things Retirees Aren’t Spending Their Money On

7 minute read

Devon Taylor

By Devon Taylor

Key Takeaways

  • Most retirees are on a fixed income, with very little new money being added to their nest eggs.
  • As such, they make different spending choices than they did in their working years.
  • Here are just a few of the things that most retirees spend much less on, when compared to working households.

When you finally reach that point in your life where you can retire, your budgeting needs to adjust. After all, you’re no longer bringing in a regular income. Instead, you’re most likely on a strict fixed income made up of your savings, investments, and social security. As a result, many retirees stop spending money on things they used to buy freely.

No one ever really knows how long their retirement nest egg is going to have to last. However, you can definitely make yours last a bit longer by cutting back on unnecessary spending. If you’ve ever wondered how retirees are making it work in an era of hyper inflation, it’s mostly a matter of different spending priorities and strong financial discipline. Or, in more simple terms, they aren’t spending money on a bunch of things.

Here’s a list of things that retirees aren’t spending much money on. Some are more obvious, but others might take you by surprise.

Clothing

The first item on our list is one of the ones that makes obvious sense. By the time you reach retirement age, you probably have an entire closet (or two) full of clothes that already fit you. Unless you’re some sort of fashion savant, needing the latest designer trends, you likely don’t need much in the way of new clothes.

An additional factor here is leaving the workforce. You won’t need to regularly spend on work clothes, whether that’s a professional looking blazer or rugged steel-toed boots. According to at least one study, the average retired household spends just over $1,000 per year on new clothes. The average non-retired household spends close to $1,900, almost double.

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Entertainment

This one is more of a surprise, since you’d think retirees would use their new free time to enjoy their golden years. However, when it comes to things like movies, concerts, or sporting events, it’s still primarily a younger crowd. You just don’t see many senior citizens lining up for the next big Marvel Cinematic Universe entry.

There are some contributing factors, such as mobility and pandemic-related concerns. These tend to keep the retired masses from heading into larger crowds. Instead, the trend seems to be that retired folk are happy enough to stay at home and watch Netflix or Disney+. Just be careful that you don’t end up subscribed to a dozen of these streaming services, or your entertainment spending could get out of control.

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Housing

Obviously, retirees still need a place to live. Luckily, many of them have spent decades paying off their mortgages and now own their homes free and clear. According to the U.S. Bureau of Labor, almost 62% of Americans between 64 and 74 don’t have any mortgage debt. A whopping 82.5% of Americans over 75 are totally mortgage free.

Housing costs don’t entirely disappear, though. You’ll still need to pay for property taxes, insurance, utilities, and general home maintenance. And if you didn’t manage to buy a home back when they were affordable? Well, you could be stuck using your retirement savings to continue paying rent. On average, though, retirees spend a lot less on housing than younger generations.

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Education

Here’s another obvious one. For most people aged 60 or older, the days of college tuition and school expenses are long gone. Even if you count contributing to their children’s educations, most retirees have passed that point in their lives too. The average retired household only spends $350 a year in educational expenses, compared to over $1,600 per year for working households.

Even if you do want to go back to college or university once retired, you might not have to pay full price. Plenty of institutions offer courses with steep discounts (or even free) to senior citizens. It should be noted that seniors who contributed money towards their grandchildren’s education expenses were not counted here.

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Investments

Unlike most of the other things on this list, not spending your money here after retirement is actually a mistake. Plenty of retirees wrongly believe that leaving the workforce is a singular finish line. You can stop saving, stop working, and start enjoying the fruits of your decades of labor. However, every financial expert will warn you that this type of thinking can be costly.

You absolutely should continue investing a portion of your retirement income. After all, you’ll likely live for another 15, 20, or even 30 years after you quit working. That’s a lot of time for your assets to continue appreciating in value. However, a lot of retirees simply stop contributing to their investments when they leave the workforce. Don’t make the same mistake.

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Technology

You don’t see many senior citizens rocking the hottest new iPhone Pro Max (with AirPods Pros 2, of course), a top of the line gaming PC, or an UHD 8K 75-inch smart TV. Once the steady stream of paychecks stop rolling in, the desire to spend your resources on these high-end items drops considerably.

Retirees are simply content with their slightly older smartphone, good enough TV set, or a hand-me-down laptop. We guess that the need to have the newest, shiniest piece of technology starts to fade at a certain age. The same logic applies to things like video game consoles too, as most retirees simply aren’t interested in owning the newest PlayStation or Xbox.

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Impulse Buys

On average, retirees don’t spend nearly as much time on social media as younger generations. That’s probably a big part of why they don’t spend nearly as much money buying impulse items. After all, all that targeted advertising can really wear you down over time. Without the algorithms constantly urging senior citizens to be good little consumers, they end up saving more of their money.

Impulse buying doesn’t only happen online. Brick and mortar stores also line their checkout aisles with impulse items. Retirees also do a better job of avoiding these temptations. They either recognize they don’t actually need the item or conclude their budget doesn’t allow for it. Sometimes, it’s both. Maybe it’s just a strong financial discipline, developed over five or six decades.

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Additional Vehicles

In today’s modern society, it’s more and more likely that every adult owns their own car. That holds true even as they meet their partner, fall in love, get married, and have children. The fact that women are now more likely to be fully employed than fill the role of homemaker adds to the need for families to have multiple vehicles.

However, once retirement hits, the need for multiple vehicles often dwindles. When you factor in the additional costs of keeping a car on the road (insurance, gas, maintenance, licensing, etc), many retirees ditch extra vehicles once they leave the workforce. With the extra free time available from not having to work, it’s much easier to share a vehicle with your spouse. Or just do more things together. Either way, the fewer vehicles you own, the less you’ll spend.

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Alcohol

The average retiree is basically partied out. Between having a very different type of social life and common health concerns, most senior citizens spend a lot less money on alcohol than other age groups. According to this New York Times report, the average retired household spends close to 50% less on alcohol than a working one. That’s $198 a year, compared to $381.

The same logic applies to tobacco usage too. Only 9% of senior citizens smoke, compared to 15.5% of the overall adult population. Once again, health concerns are a primary factor, but so are the costs associated with these products. Retirees aren’t exactly the hard partying type, so it should be no surprise that they aren’t drinking or smoking as frequently as the working crowds.

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Pets

The tag “man’s best friend” seems to only apply to younger men (and women, of course). A pet of any kind requires a lot of commitment, both in terms of time and money. As people reach retirement age, they often don’t get as much benefit from having a furry friend around. Sure, studies have shown that having a pet can help keep you active and decrease loneliness. On the other hand, they may not be a good fit for those with fixed budgets or mobility issues.

A lot of retirees only had pets in the first place to please their children (or grandchildren). As those generations grow up and become adults, the desire to have a puppy around the house wanes. As an additional factor, it’s a bit harder to travel when you have pets, which is an activity that many retired folks try to enjoy now that they are on permanent vacation.

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Taxes

You can never escape the clutches of the tax man, no matter how long or how hard you’ve worked in your career. Even in retirement, you’re expected to pay your fair share of taxes. That’s the bad news. The good news, however, is that your tax liability is almost certainly going to be much lower as a retiree than it was as a full-time working citizen.

There are multiple ways to lower your tax bill after retiring. The most common is to use tax-advantaged investing accounts like a 401(k) or Roth IRA. You can even take advantage of both, for a bit of tax diversification. Additionally, some states waive or lower certain taxes (property tax, for example) for senior citizens. Pensions and social security — income designed purposely to be used after you retire — are also sometimes exempt from certain taxes. Retirees may also be eligible for new tax credits or deductions that they weren’t while working.

Don’t get the wrong idea, though. You’ll still owe some taxes on your retirement income. However, it will be much less than you’re used to.

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Devon Taylor

Managing Editor

Devon is an experienced writer and a father of three young children. He's simultaneously trying to build college funds and plan for an eventual retirement. He's been in online publishing since 2013 and has a degree from the University of Guelph. In his free time, he loves fanatically following the Blue Jays and Toronto FC, camping with his family, and playing video games.