Retirement calculators usually overestimate how much you'll spend when you retire. But older retirees don't spend as much as younger retirees do. They spend more on medical care as they age, but not enough to offset the steady drop in the rest of their living costs. Kenn Tacchino and Cynthia Saltzman, professors at Widener University in Chester, Pa., quantified this change, based on data from the Labor Department's 1995 Consumer Expenditure Survey. They found that people 75 and older spent 26.5 percent less, on average, than people ages 65 to 74.
Some older people spend less only because their incomes have dropped.
But most appear to cut back voluntarily. Nearly half of all retirees are still adding to savings eight years after they leave their jobs. Baby boomers will probably be no different. They have relatively higher housing expenses than their parents did. But otherwise they show no greater propensity to spend, the professors say.