Can I Retire? Series — Part 3 of 12
You’ve calculated your current spending. You’ve accounted for the big rocks. Now comes the question that trips up most retirement planners:
Will you spend more or less in retirement?
The honest answer: it depends. Some expenses disappear the day you stop working. Others show up for the first time. And a few that seem fixed today might change in ways you haven’t considered.
Your retirement spending number isn’t your current spending number. It’s a different number — and getting it right matters.
What Goes Down
Some costs are directly tied to working. When the job ends, they end too.
Payroll taxes. This is the big one people forget. While you’re working, you’re paying 7.65% of your income to Social Security and Medicare (more if you’re self-employed). On a $100,000 salary, that’s $7,650 a year that vanishes the moment you stop earning wages. Your spending calculation from Part 1 included this — but your retirement spending won’t.
Retirement contributions. If you’re maxing out your 401(k), that’s $23,000 a year (plus catch-up contributions if you’re over 50) that’s currently coming out of your paycheck. That’s not spending — it’s saving. Once you retire, it stops.
Commuting. Gas, tolls, parking, transit passes, car maintenance from putting miles on the vehicle. For some people this is negligible. For others — especially those with long commutes or expensive parking — it’s $3,000 to $8,000 a year.
Work clothes and grooming. Suits, dry cleaning, haircuts on a schedule, the shoes that wear out because you’re on your feet all day. Not a huge number for most people, but it adds up — maybe $1,000 to $3,000 a year depending on your profession.
Lunch and coffee. The $12 salad. The $6 latte. The “quick” lunch with coworkers that turns into $20. If you’re buying lunch three times a week and coffee daily, you might be spending $4,000 to $5,000 a year on workday food you won’t need when you’re home.
Childcare and education costs. If you’re still paying for daycare, private school tuition, or college expenses, those often end around the same time retirement begins. This one varies wildly — it might be zero, or it might be $30,000 a year that’s about to disappear.
What Goes Up
Retirement isn’t just subtraction. Some costs increase — sometimes dramatically.
Healthcare (especially before Medicare). If you retire before 65, you’re on your own for health insurance. Employer-subsidized coverage disappears. COBRA is expensive and temporary. ACA marketplace plans can run $1,000 to $2,000 a month for a couple in their early 60s, depending on your state and income. That’s $12,000 to $24,000 a year that might have been $3,000 when your employer was footing most of the bill.
Travel. Most people travel more in early retirement. You finally have the time. The bucket list is calling. That two-week European trip you’ve been postponing? It’s probably not cheap. If travel is part of your retirement vision, it needs a realistic number attached.
Hobbies and activities. Golf memberships. Woodworking equipment. Art supplies. The boat you’ve always wanted. Retirement gives you time — and time often gets filled with things that cost money. Some people spend more on hobbies in their first five years of retirement than they did in the previous twenty.
Utilities and household costs. You’re home more. The heat runs more. The air conditioning runs more. You use more electricity. You might cook more (groceries up, restaurants down — but groceries still up). These increases are usually modest — maybe $1,000 to $2,000 a year — but they’re real.
Boredom spending. This one’s sneaky. When you’re working, you don’t have time to spend money. When you’re retired, you have all the time. The random Amazon purchases. The home improvement projects. The “let’s just go out to eat” because you can. People underestimate how much unstructured time can cost.
The Retirement Spending Smile
Here’s something the research shows that most people don’t expect: retirement spending isn’t flat. It follows a pattern that looks like a smile.
Early retirement (60s-early 70s): Spending is high. You’re healthy, active, traveling, doing all the things you postponed. This is the “go-go” phase.
Middle retirement (mid-70s-early 80s): Spending drops. You travel less. You stay home more. You’ve done the big trips. The hobbies have settled into routines. This is the “slow-go” phase.
Late retirement (mid-80s+): Spending rises again — but now it’s healthcare. Home assistance. Modifications to your living space. Possibly long-term care. This is the “no-go” phase, and it can be expensive.
The calculator on caniretire.app assumes relatively steady spending (adjusted for inflation) because modeling the smile adds complexity without necessarily improving accuracy — your personal smile will look different from the averages. But it’s worth knowing the pattern exists. If you’re planning aggressively low spending in early retirement, you might be fooling yourself.
Building Your Retirement Spending Number
Here’s the practical exercise:
Start with your current spending (from Part 1). Add your big rocks allowance (from Part 2). Now adjust:
Subtract: Payroll taxes, retirement contributions, commuting costs, work-related expenses, any childcare or education costs that will end.
Add: Healthcare premiums (especially if retiring before 65), expected travel, hobby costs, a buffer for the lifestyle creep that comes with free time.
For most people, the subtractions and additions roughly cancel out — retirement spending ends up within 10-20% of current spending. But “most people” isn’t you. Your specific situation might be dramatically different. Someone retiring at 55 with no employer healthcare will have a very different adjustment than someone retiring at 67 with a pension and Medicare.
Do the math for your situation.
Your Homework
Take your combined number from Parts 1 and 2 (baseline spending plus big rocks allowance). Now build your retirement version:
List everything that goes away when you stop working. Estimate dollar amounts.
List everything that increases or appears for the first time. Estimate dollar amounts — and be honest about healthcare if you’re retiring before Medicare.
Net them out. That’s your retirement spending number — the one you’ll enter into the calculator.
In Part 4, we’ll tackle a different question: what actually counts as retirement savings? Spoiler: your house doesn’t. Neither does that Ken Griffey Jr. rookie card.
Next: Part 4 — What Counts as Investable?
