As retirement becomes more of a reality for more Americans, the anticipated expenses associated with retiring can actually be less than when still working.
Lifestyle changes and adjustments automatically occur once we retire. Such changes include not filling up at the corner gas station twice a week to get into the office, or perhaps not spending hundreds of dollars each year for work clothes.
A number of expenses that existed during our working years may not necessarily be there in our retirement years. These are a few of the most prominent:
Mortgage payments made over the years may have dwindled the mortgage balance down enough to just have it paid off. It may make sense paying off a small mortgage balance since the bulk of the interest has already been paid and used as income tax deductions.
Taxes and applicable tax rates may change once retired. In our earning years we are taxed on earned income and in our retirement years social security and investment income is most of what is received. Some clever tax planning and active investment management may yield lower tax liabilities than when actively employed.
Savings and setting aside disposable income over the years for retirement plans also goes away, as we actually start to use some of those assets for retirement income in lieu of earned income.