Focus on these 3 expenses if you want to retire early — trimming these essential costs will keep your cash flowing through retirement

Data from Social Security’s OASI trust fund and from the Committee for a Responsible Budget show that funds are running low and cuts may be triggered as soon as 2032, with average monthly payments slashed by $500.

And on top of that, health care expenses continue to skyrocket, with the average 65-year-old U.S. couple pegged to pay $345,000 in medical care expenses for the remainder of their lives, according to Fidelity Investments.

It’s no wonder that EBRI’s latest U.S. retirement confidence survey shows that about two in five workers and half of retirees rated their household financial well-being “as at least very good.” Fewer than three in five career professionals report having enough savings to handle an emergency expense — down from 64% in 2025.

“Retirement confidence has clearly softened this year, and the data show why,” said Craig Copeland, director of wealth benefits research at EBRI in a statement. “Americans are contending with a mix of immediate financial pressures and long-term uncertainty. Many workers are struggling with debt, inflation and rising housing and health care costs, while retirees are increasingly worried about the future of Social Security and Medicare.

“Together, those pressures are making it harder for people to feel secure about their retirement.”

The good news is that retirees don’t have to take rising expenses lying down. There are effective ways to curb lifestyle costs for seniors, and the journey starts by identifying and addressing major household cost categories that deplete funds. These three expenses, in particular, should be a cost-cutting priority.

Housing expenses

Housing offers the greatest opportunity to reduce costs.

“Health care costs are largely fixed, and often people aren’t willing to cut transportation as that affects their lifestyle negatively,” Mark Sanaiha, founder and wealth advisor at Phoenix, Ariz.-based Macallen Capital, told Moneywise. “Often, our clients are in a house that’s too big and requires too much maintenance for the chapter that they’re entering, so downsizing comes to mind first.”

Relocating to a lower-cost-of-living or lower-tax state is another great option, although this is certainly more difficult for families with roots in the area.

In particular, home maintenance and repairs are an underestimated expense in retirement.

“Few retirees actually budget for a new roof, the HVAC that’s on its last leg, or the water heater that’s 10 years old,” Sanaiha said. “The solution is treating it like a utility; we plan for around 1% of the home value per year in maintenance, so it becomes an expense and not an emergency.”

Health care costs

“Health care remains one of the biggest wild cards in retirement spending, and it’s becoming more expensive every year,” Whitney Stidom, vice president of consumer enablement at eHealth, told Moneywise. “Many retirees assume that once they’re enrolled in Medicare, their health care costs are largely set.”

In reality, out-of-pocket expenses can still take a significant bite out of a fixed income, and Medicare plans often change from year to year.

“Provider networks, prescription drug coverage, premiums and cost-sharing can all shift,” Stidom noted. “That’s why one of the simplest ways retirees can potentially lower expenses is to review their coverage regularly rather than automatically sticking with the same plan. Comparing options each year may reveal lower costs, stronger benefits, or coverage that’s a better match for current health care needs.”

Sanaiha agreed, noting that one of his greatest cost concerns for retirees from an inflation standpoint is long-term care, with the average 65-year-old retiree needing to stash $135,000 for long-term care.

“For years, care costs have been rising faster than general inflation, and that’ll likely never change,” Sanaiha noted. “While you’re still insurable, look at long-term care coverage in your 50s, compare policies, and if you decide to self-fund, earmark the assets for it.”

Taxes are a big cost issue, too

The biggest expense that almost nobody budgets for is taxes.

“It’s the one retirement expense that you cannot find a way to get out of by using coupons,” Achim von Bodman, certified financial planner at Watter CPA, told Moneywise. “People think that the amount of taxes they have to pay will go down when they retire. For people who save their money carefully, it often goes up instead because the money they put into a 401(k) over many years becomes taxable all at once.”

One big problem is that when you’re 73 years old, the IRS says you have to start taking money out of your account whether you need it or not.