checklistOne of the very best retirement “cost-control” pieces we’ve come across is by Tom Sightings for He writes: “Now that the stock market has shown us we cannot always rely on capital gains from our investments, or extra income from our savings, it may be time to take a closer look at the other side of the ledger: our retirement expenses. Not the little ones, like the cable TV bill or your morning latte, but the big ones that really make a difference in your budget.”

“It might reassure you to know that, on average, household expenses steadily decline with age, falling on average almost 20 percent between ages 65 and 75 and a total of 35 percent by age 85, according to a study by the Employee Benefit Research Institute.” Sightings goes on to list major retirement expenses and what to do about them. Here are three:

1. Housing. This remains the largest expense in a retiree’s budget, just as it was before we retired. People over age 50 spend an average of 40 to 45 percent of their household budget on housing and housing-related items such as utilities, home insurance, home furnishings, gardening and yard expenses. But this is one expense you can control, if you want to. You do not have to redecorate. You can downsize to a smaller home in a less expensive neighborhood. Some retirees move to an area of the country with a lower cost of living. And many retired homeowners have the option to take out a reverse mortgage to put more cash in their pockets.

2. Health care. This is one category of expenses that tends to increase with age. Even if you have good health insurance, you’ll likely face increasing out-of-pocket expenses for medical procedures and tests, as well as both prescription and non-prescription drugs. And don’t forget dental expenses, which also tend to go up as we get older. Health care costs typically swell up from 10 percent of income for those in their 50s to 20 percent for people in their 80s. One option to consider is long-term care insurance, which will cost you money in the short term, but may save you from spending down all your assets if you need extensive nursing or assisted-living care.

3. Taxes. You’re no longer subject to payroll taxes once you stop working, but you may      still have to pay income tax on a portion of your Social Security benefits as well as income you receive from investments and withdrawals from your IRA. In addition, some states tax Social Security and pension income. So don’t forget to take taxes into account when you make withdrawals from your retirement account. And if you intend to move in retirement, it’s worth researching which states offer tax breaks to retirees.