How expenses can change during retirement

Work is a major component of daily life, so much so that Andrew Naber, an industrial and organizational psychologist and an associate behavioral scientist at RAND Corp., determined that the average person spends 90,000 hours at work over the course of his or her lifetime. According to a 2014 Gallup poll, the average American retires at age 62, but roughly 64 percent of professionals bid farewell to the workplace between ages 55 and 65.

Retirees must make a number of adjustments once they call it a career. No such adjustment is as significant as the financial one. Most people find their post-retirement income is considerably less than when they were working full-time.

That is why financial planners often recommend saving and investing enough during working years to be able to replace 80 percent of preretirement income. Certain expenses get lower after retirement, but some will rise. Here’s a look at what to expect when the bills come due during retirement.

• Food costs: Food costs may go down in retirement because shopping and preparing meals for one or two people is much less costly than feeding a family of four or more. However, dining out may increase as you have more free time to visit local eateries.

• Automotive costs: According to data from the U.S. Department

of Transportation, the average commuter spends 25.8 minutes behind the wheel twice a day, and

the average driver puts in 13,474 miles behind the wheel each year — with people between the ages of 35 and 54 clocking close to 15,000 miles. Less time

spent in the car means fewer gasoline fill-ups and longer durations between oil changes and other services. In addition, based on the Internal Revenue Service reimbursement rate of 58 cents per mile, a typical commute of 20 to 30 miles a day costs $11 to $16 a day or $55 to $80 a week. In a year, you could easily be spending $2,000

to $4,000 a year commuting if you live within 15 miles of your job. Without commuting, that cash stays in your pocket.

• Taxes: Many people can expect to be done paying federal income taxes

when they are retired and no longer earning an income. If the majority of retirement savings were in Roth IRA accounts, contributions are available

for withdrawal tax- and penalty-free at any age.

• Housing: Your mortgage may be paid off before or soon after retirement. That eliminates the single largest expense in many people’s budgets. If your home will not be paid off, it’s possible to downsize to reduce monthly payments.

• Travel: While many other expenses can go down, travel is one expense that can shoot up during retirement. But many people are happy to bear this cost. With more time for travel, retirees may allocate more funds

toward vacations and other great escapes.

• Health care: Seniors often see their health care needs and costs go up after retirement. It’s important to understand what is covered by health plans, and it’s equally important to set money aside for unforeseen medical expenses.

Many costs of living decrease after retirement. However, it is wise to take in the whole picture to understand

how to budget for retirement.