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Smart ways to cut retirement expenses & stretch your savings

September 3, 2025
Last revised: September 3, 2025

Smart spending strategies in retirement can help you hedge against inflation, reduce financial stress and free up money for what matters most.
Kevin Dodge/Getty Images/Tetra images RF

Key takeaways

  1. As prices rise, retirees on fixed incomes may want to strategically trim expenses and direct spending to things that give them the most fulfillment and enjoyment.
  2. Small changes can make a big difference in your budget in the long run. Big changes, like moving to less expensive housing or selling a car, can free up cash for bigger priorities.
  3. Making a realistic budget can happen well before retirement, too, allowing you to make the most of your available retirement income, savings and investments.

Part of feeling contentment and security in retirement is prioritizing what really matters to you. After you transition to live on savings and other assets, you might decide you want to trim in some places as a hedge against inflation or today's longer lifespans. Or you might just want to have more to spend on the things that bring you joy, whether that's traveling, spending time with your grandkids or working on a new hobby.

Cutting expenses in retirement and stretching your savings is possible—without sacrificing quality of life. See how small adjustments can help you spend smart and create long-term impact.

Why cutting expenses in retirement matters

After decades of thinking about earning income, you face a different mindset in retirement. You might still think about generating money from part-time or consulting work, in addition to investments, Social Security and, perhaps, a pension. But now, managing expenses becomes crucial, especially with the rising costs of housing, health care and everyday essentials like groceries.

Cutting costs in retirement doesn't mean sacrificing lifestyle; it means aligning spending with your values and long-term financial goals. Trimming things that aren't very important to you puts money back into your pocket for things that are. It gives you the freedom to prioritize the spending that is fulfilling. Plus, knowing your income will last you through retirement can reduce anxieties and give you more financial flexibility in this season of doing what you love.

How to cut expenses in retirement: 10 strategies to try

Remember that little things add up. Making one big shift might be the solution for some people, but making small changes also can add up to a big difference in the long run. Here are some ways to control how you spend money.

  • Review your budget for lifestyle creep. People tend to spend more if they have the money available. If you don't deliberately check your budget, it's easy to opt for more costly choices. By carefully evaluating your spending periodically, you can push back on lifestyle creep.
  • Downsize or relocate strategically. Housing is often the largest retirement expense; downsizing or relocating can significantly reduce monthly costs and improve financial flexibility. If you opt for a simpler, smaller space close to people or activities that bring you joy, you can reallocate the costs of property upkeep as well as any monthly payments.
  • Eliminate or refinance debt. Even though there's a short-term increase in costs, paying off debt can be a valuable way to reduce ongoing expenses, freeing up monthly fixed costs for things you prefer. Refinancing may help you control the interest rate and monthly payment on your debt while giving you a manageable payback plan.
  • Cut transportation costs. Owning a car can become a source of diminishing returns in retirement. If you and your spouse or other family member can share a car or rely on public transit, you can free up spending on gas, insurance and auto repairs.
  • Take advantage of senior discounts. Many restaurants, drug stores and even retail shops offer senior discounts. By patronizing these businesses over others and taking advantage of that senior bonus, you can stretch your dollars.
  • Review and reduce insurance premiums. After a few years, insurance premiums sometimes go up enough that shopping around can yield substantial savings. Look into bundling your insurance costs, which can make a big difference in the bottom line.
  • Use free or low-cost entertainment. Consider how you might fit more free and low-cost entertainment into your days. Spending time with friends and family, volunteering or getting out in nature can be nearly free and bring just as much fulfillment as more costly retirement hobbies.
  • Plan meals and cook at home. Even if you've never been much for cooking and baking, meal planning and cooking at home can be a source of lifelong learning and enjoyment while also reducing costs. If you love meeting friends at restaurants, consider whether you could replicate any of your favorite dishes. Then host a dinner party and save money while connecting with friends.
  • Cancel subscriptions and unused services. Subscription creep can quietly inflate your monthly expenses—review and cancel unused services to reduce fixed costs and redirect funds toward savings. If you can streamline and cut subscriptions, you'll have fewer fixed costs each month.
  • Lower utility bills. You may be surprised at how much you can save by implementing energy-saving habits. Simply adjusting your thermostat by a few degrees or choosing to keep lights off during the day can make a big difference in your bill over time.

What is the biggest expense for most retirees?

One reason to keep your budget trim in retirement is to make room for unexpected costs. Some expenses, like housing, food and utilities, are substantial, and keeping them under control is valuable. But for many people, health care costs in retirement end up being a major line item. Prioritizing funds for health care expenses can help you avoid financial frustration when you should be focused on healing and recovery.

Health care in retirement is often made up of various smaller costs that can sneak up on you. You may have premiums for Medicare Part B, Part D or a Medigap or Advantage plan. You'll also want to prepare for typical out-of-pocket costs, prescriptions and any health insurance costs. While no one can predict an unexpected hospital stay, you can take action to keep ongoing health care costs reasonable and minimize the impact of health care needs on your budget.

  • Shop Medicare plans annually. As your health evolves, a different structure in your Medicare insurance plan may make more sense. Don't just renew every year without reading up on the other options available.
  • Use preventive care to avoid costly issues. It's tempting to treat symptoms as regular aches and pains, but getting to your primary care provider frequently and getting answers about symptoms can save you a lot of costs in the long run.
  • Decide about long-term care expenses early. Long-term care coverage will be most available and affordable early in retirement or even a bit before. Buying a policy can help you spread out health care costs via monthly premiums rather than having to cope with major care costs all at once.
  • Make use of HSAs. Health savings accounts, if offered with your pre-retirement health insurance, can help you take care of health care expenses and reduce your tax burden. Those savings go further as a result.

Categorizing your expenses and cutting unnecessary spending in other areas, such as downsizing one's housing or trimming subscriptions you can live without, can make rising medical expenses less of a challenge and help you stay on firm financial footing.

How to make a retirement budget that works

Whether you need to adjust your existing budget or you are trying to plan for retirement in the next few years, structuring your budget well can help reveal ways to free up money and allocate spending where it matters most.

  • Use a retirement income calculator to get a feel for what income you can expect and what a safe drawdown on your savings and investments might be.
  • Document your current costs and begin noting which expenses will go up, go down or hold steady during retirement.
  • Use a spreadsheet or other tool over time to continue to adjust. These tools can help you make small adjustments to your budget without reinventing the wheel every time. During retirement, this can allow you to allocate differently and feel like you've got your hands on the financial steering wheel.

One benefit of strategizing your retirement budget early is factoring in "wiggle room" for unexpected fun. If you don't need to spend extra in a given month, roll over your spontaneity budget to create a little pool of money for exciting opportunities down the road. While getting used to working with a retirement budget can take time, after a while, it often creates new freedom.

Cutting expenses while enjoying a fulfilling retirement

Financial confidence comes from knowing where your money is going. Often, cutting back on expenses brings joy, not deprivation. You have many ways to modify your budget, so don't feel hemmed in by one standard type of spending plan. Instead, feel confident: If you are spending less than you're bringing in each month, you're most likely spending in a financially sustainable way.

Want to work through the details with a knowledgeable professional? A Thrivent financial advisor can help you create a budget and spending strategy that will help you streamline in some areas and prioritize what matters most to you.

Concepts presented are intended for educational purposes. This information should not be considered investment advice or a recommendation of any particular security, strategy, or product.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.

Thrivent is not connected with or endorsed by the U.S. government or the federal Medicare program.
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