How your expenses change in retirement—and what it means for your wallet

By Altelisha "Lisha" Taylor, MD, MPH
Published April 30, 2024

Key Takeaways

  • Many of your highest expenses may decrease drastically in retirement, but other expenses that account for only a small portion of your current budget increase exponentially as you age. 

  • For many physicians, their housing expenses, taxes, and childcare expenses decrease in retirement.

  • Despite increases in healthcare expenses, retirement allows many physicians increased opportunities for travel and entertainment—as long as it fits into their budget.

Are you ready for retirement? Generally, physicians who are financially prepared to retire have saved approximately 25 times their annual expenses, but how can you be sure this is enough? 

Your retirement expenses will most likely look different than they do now—some costs may go up, but some may go down.

Having a better understanding of how expenses change during retirement can help you more accurately define how much you’ll really need to be able to enjoy your golden years free from financial woes.

Expenses likely to go down


Many retirees continue to live in the house they purchased at some point during their career, which may be completely paid off by the time they turn 65. Some retirees choose to sell their home and downsize, aiming to live on whatever profit they made during the sale. Either way, housing is usually not a significant expense during retirement, as you will no longer (hopefully) be making mortgage payments.


Another cost that goes away is the portion of your income you’ve been allocating to retirement investments. Before retirement, many physicians allot at least 20% of their income to save and invest in 401ks or 403bs. In retirement, of course, you’ll finally be eligible to withdraw these funds.


Whether it’s paying thousands of dollars per month for daycare or nanny services, spending hundreds of dollars every few weeks on extracurriculars, purchasing basic necessities like food and clothes, or covering the cost of school tuition, the money many doctors spend on their kids can be substantial each year. 

As you enter retirement, this changes and reduces dramatically. While you may still want to provide some sort of financial support to your kids, chances are your children are now independent adults who are self-sufficient.

You no longer have to spend five-figures or more for childcare, extracurriculars, or college, which is money you can now allocate toward other important expenses.


As working physicians, taxes are one of our largest yearly expenses. In retirement, this will decrease significantly. Because you are no longer working and earning 6-figures per year, you won’t have a large tax bill.

Many retired doctors only pay federal and state taxes on the money they withdraw from their work retirement accounts. They also don’t have to pay FICA taxes (for Medicare and Social Security). This combination of having less income, a lower tax rate, and fewer types of taxes to pay, drastically lowers your tax bill.  

Expenses that will increase


If you ask most people what they are looking forward to most when they stop working and retire, it’s traveling. Lots of doctors have the desire to see the world and experience different cultures. Their busy work schedule, parental obligations, and other financial priorities may have prevented them from doing so in the past. Now that they are retired and their kids are self-sufficient, many of them want to travel (especially if they retired in their 50s or 60s in relatively good health). 

While some physicians enjoy staying close to home, many others want to travel internationally for multiple days, weeks, or even months at a time.

While there is nothing wrong with these desires or travel plans, be sure you account for them in your budget. This increase in money spent on travel tends to be most pronounced in the first decade of retirement. 


Retirement gives you many opportunities to do things you couldn’t do while you were working. For some, this means getting a new hobby, gaining membership to certain organizations or country clubs, and/or learning a new sport. For other people, it means going to various shows around the city, trying out new restaurants, exploring areas of nearby towns, and taking some weekend trips to the beach or mountains.

While not mandatory, spending money on these activities can add a tremendous amount of happiness to your life once you retire, so prepare yourself and your wallet for this change. Many retirees spend a lot more money on discretionary spending than they did while they were working. 


If you work as an employed physician, there’s a good chance the amount you pay for healthcare is only a small percentage of your monthly bills. One of the main reasons healthcare appears to be decently affordable is because your employer pays a large percentage of the cost. Many people are shocked to learn how expensive healthcare is when they have to pay for it on their own. If you retire before age 65, and are not yet eligible for Medicare, you will likely have to buy healthcare on your own on the federal insurance marketplace.

Although some retirees can qualify for subsidies, the average person in their 50s pays around $650 per month in healthcare premiums while someone in their 60s pays around $970 per month in premiums. Unfortunately, this cost tends to increase overtime, even once you qualify for Medicare. 

Related: Don’t go broke paying for healthcare in retirement

At the same time, assisted living facilities, long-term care establishments, and nursing homes can cost thousands of dollars per month. Before you retire, be sure you have adequately accounted for healthcare costs and the very likely possibility that these costs will only increase as you age.

Some expenses stay the same 

While many other major expenses may be changing, there are a few things that may remain stable, or at least keep pace with the rate of inflation. These are things like food and groceries, transportation, and personal products and incidentals for self-care.

Other expenses that may remain stable is the amount you spend on gifts or donations (unless you are rapidly trying to spend down a massive fortune). You may also still spend the same amount on bills like electricity and internet, pets, and any hobbies like reading, painting, gardening or other side projects around your home. 

What this means for you

As you start thinking about what retirement will look like for you, be sure to also consider how your expenses might change. Many of the things you spend the most money on now, such as housing, taxes, and childcare, will decrease significantly. Other things that may be small portions of your budget right now (like healthcare and entertainment) may increase. Thinking about how your life may change in retirement will help you ensure you are financially prepared for all that's in store. 

Read Next: Don’t go broke paying for healthcare in retirement
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