Research shows that spending declines about 1.9% per year for singles and 2.8% per year for couples. If a single retiree spends $50,000 a year at 65, that number often drops to around $33,000 by age 85. For couples, spending typically falls from $70,000 at 65 to about $45,000 by 85. What’s surprising is that this pattern holds true across income levels even wealthy households tend to spend less over time.

So why does this happen? It’s not about financial distress. In fact, studies show that financial satisfaction increases with age. More than 40% of retirees in their late 70s say they’re “very satisfied” with their finances. The decline in spending has far more to do with lifestyle and priorities than with running out of money.

In early retirement, people are more active they travel, eat out, and spend freely on hobbies or home projects. But as they get older, energy levels change, travel slows down, and many shift from experiences to comfort. Healthcare becomes a bigger expense, but it replaces other categories like leisure, transportation, and clothing. For example, a couple that spent $10,000 on travel in their mid-60s might spend just $2,000 to $3,000 on shorter, local trips by their mid-80s.

Understanding this pattern can completely change how you approach your retirement income strategy. The traditional rule of thumb that you’ll need 70% to 80% of your pre-retirement income may be too high for most people. In reality, many retirees only need about 50% to 60% of their working income to maintain their lifestyle. For example, if you earned $80,000 before retirement, you might only need around $55,000 early in retirement, and perhaps closer to $40,000 later in life.

That has a powerful implication: you might not need to save as much as you think. Oversaving is one of the most overlooked financial behaviors I see. People work longer than they have to, delaying experiences and freedom because they’re anchored to the idea of hitting an arbitrary savings number. But if your spending naturally tapers off with age, your portfolio doesn’t have to stretch as far as you might fear.

That doesn’t mean you should stop saving far from it. But it does mean your plan should reflect how your lifestyle will change over time. Start by tracking your current expenses and asking which categories will likely shrink or grow in retirement. Run different income replacement scenarios, 60%, 70%, 80%, and see what feels right for your lifestyle. And most importantly, build flexibility into your plan so you can enjoy the “go-go years” of early retirement, knowing that your spending will likely decline naturally later on.

The goal of retirement isn’t to die with the biggest account balance it’s to live the richest life you can with the money you’ve earned. Understanding how your spending evolves helps you design a plan that’s both realistic and rewarding.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.

The post Why Retirees Spend Less as They Age and Why That’s Actually a Good Thing appeared first on ROI TV.