One of the biggest expenses during retirement is surely going to be medical costs. However, according to a new report, it’s your home that you should be worried about.
The report from T. Rowe Price found that spending — despite limited funds — tends to increase a bit during retirement. The survey of 1,300 households found that about 50 percent of retirees reported increasing their spending by about 25 percent. While healthcare costs do pop up in retirement, the costs associated with homes are the biggest obstacle. The study found that home expenses — including things like repairs, mortgages, rent, and taxes — contributed to about 25 percent of the average retiree’s bump in spending. Healthcare-related expenses, meanwhile, only contributed to about a five percent increase.
One reason for the increase in home-related expenses is that owning a home gets more expensive every year. In 2022, the average cost of owning a home (not including a mortgage) was $15,400. This year, that number increased to $17,500. Another factor contributing to increasing home spending is the older people get, the more they need to spend on things like housekeeping, maintenance, and laundry services. It’s harder to do those tasks as you get older, so the spending on them naturally increases.
The takeaway here is that you should take a long, hard look at your housing situation in retirement. If there is a way to downsize, you probably should at least entertain the idea. Homeownership is always expensive, even during the golden years.
Do One Thing: Consider downsizing your home in retirement to save money.