Most Americans actually get richer in their first 10 years of retirement. Here's why, and how you can set yourself up for success in 2026

According to the most recent Survey of Consumer Finances conducted by the Federal Reserve, net worth often increases during the first decade of retirement and remains higher in later years (1). It’s a trend that challenges conventional wisdom. After all, workers are inundated with warnings about making their savings last, worrying about health care costs that come with aging, maintaining their standard of living or outliving their nest eggs.

The reality is that a combination of lower spending, steady income from Social Security or pensions, and asset growth — such as home equity or investment returns — all contribute to this unexpected financial boost. This is freeing up older folks to follow their dreams, help struggling kids and grandkids, and pursue hobbies and travelling in retirement. Let's talk about how you can take advantage — without jeopardizing stability in your golden years.

Spending patterns shift

Retirement often brings a dramatic shift in how households allocate their money. Don't forget that you spent a lot of money for decades just to go to work. When you're in the workforce, time is at a premium, and you may find yourself eating out more, outsourcing tasks like house cleaning, and paying for childcare or pet care. That's not to mention all the commuting, maintaining a professional wardrobe, and the dozens of other tiny things you have to do just to be employed.

In retirement, that disappears, allowing you to cut expenses significantly. Many retirees also shift their focus toward essential expenses like housing, food and health care while reducing discretionary spending on luxuries or entertainment.

Health care costs, surprisingly, often drop after age 65 thanks to Medicare, even as people use more health care. Retirees transitioning from private insurance or paying out-of-pocket can experience substantial savings, freeing up more of their budget for other priorities.

Steady income streams

For most retirees, Social Security forms the backbone of their income. As of August 2025, the average monthly benefit for a retiree was $1,955.48, providing a reliable cash flow to cover essential expenses. Retirees with pensions enjoy an additional layer of financial stability, helping ensure their baseline needs are met even without drawing heavily on savings (2).

Another major driver of retirees’ rising net worth is home equity. Many seniors own their homes outright, and as property values increase, their net worth grows. Similarly, retirees with investments in IRAs, 401(k)s or brokerage accounts benefit from compounding growth, especially if they reduce withdrawals to match their leaner budgets. By allowing assets to grow undisturbed, retirees can create an even larger financial cushion.

Maximizing the benefits of a growing net worth

If your net worth is set to rise in retirement, knowing how to make the most of it can lead to a more financially secure and fulfilling life.

Start by reviewing your spending habits and finding ways to cut unnecessary expenses. Downsizing to a smaller home can drastically reduce housing costs while unlocking home equity. Additionally, reevaluate recurring expenses like subscription services or utility plans — small adjustments here can add up to significant savings over time.

Delaying Social Security benefits is one of the simplest ways to boost retirement income. Each year you wait beyond full retirement age (up to age 70) increases your monthly payout by about 8%. This strategy can significantly enhance your financial flexibility in retirement, providing more income to cover both essentials and extras.