Every dollar you don’t spend when retired is $25 to $33 you don’t need to set aside for retirement. Drop $10,000 in expenses and your required nest egg is at least a quarter million dollars smaller.
But… there’s a not-so-awesome part. Some expenses go down, sure. Others will remain roughly the same. Some spending categories, though, can unfortunately be expected to go up.
For many, health insurance is at least partially paid for by an employer. In retirement, you’re on your own until Medicare kicks in at 65, and even then you’ll probably purchase Medigap insurance.
You may find ways to keep travel costs from completely blowing your budget. You can travel at off-peak times, take advantage of last-minute bargains, and slow travel in a manner that doesn’t cost much more than your normal day-to-day.
Education costs come in many forms. If you’re an early retiree, you may have yet to put your kids through college. If they will go through college after you stop earning an income, you’d better have planned ahead by funding 529 Plans.