Much of the conversation about retirement costs focuses on healthcare. News headlines frequently warn about rising medical expenses, long-term care risks, and Medicare premiums. These concerns are real and deserve attention.
But healthcare is not the whole story.
For many retirees—especially federal retirees with a pension, Social Security, and Thrift Savings Plan (TSP) income—the most significant financial surprises in retirement often come from non-medical expenses. Especially housing costs that rise unexpectedly.
There is also the wild card that home maintenance along with major repairs can arrive all at once. Changes in spending patterns that occur over decades. These issues can shape retirement finances just as much as healthcare costs, yet they receive far less attention among retirement planning discussions and seminars.
This is the first in a series of articles to examine those financial dynamics with an emphasis on the role of housing.
Why Non-Medical Costs Matter
Federal retirees often begin retirement with a strong financial foundation compared to many Americans. A FERS pension provides a steady stream of income, Social Security provides inflation-adjusted benefits, and savings in the Thrift Savings Plan provide flexibility.
Yet even with this strong structure, retirement spending can evolve in ways that many people do not anticipate.
Three non-medical cost patterns appear repeatedly in retirement research.
First, spending does not decline smoothly with age. Economists have found that spending often follows a curved pattern known as the “retirement spending smile.” Expenses tend to be higher early in retirement, decline during the middle years, and then rise again later in life.
Second, housing costs often behave differently than expected. Many retirees assume housing expenses will fall once the mortgage is paid off. In reality, housing costs frequently move through cycles involving maintenance, infrastructure replacement, and later accessibility modifications.
Third, financial decisions about housing—such as downsizing—can have complex financial consequences that are often misunderstood. Some financial planners may casually mention, “You own your house—great. Now no longer any mortgage payments.” That is a superficial treatment of a complex asset.
Together, these factors will influence retirement budgets for decades.
What This Series Will Explore
Over the next several articles, this series will examine the non-medical financial realities of retirement that federal employees should understand before retirement.
We will begin by examining the retirement spending smile, a pattern identified by researchers studying how retirees actually spend money over time.
Next in this series, we will explore what might be called the retirement housing trap—the tendency for housing costs to rise again later in retirement due to maintenance, infrastructure replacement, and aging-in-place modifications.
An article providing an overall understanding of housing expenses will then follow; this topic is rarely discussed in retirement seminars.
We will also briefly explore the renting alternative to home ownership.
Another article, the crossover point in retirement budgets, examines when healthcare costs eventually overtake housing expenses and other nonmedical issues. While healthcare becomes increasingly important later in life, understanding its dynamics in the earlier decades of retirement spending is critical for your financial planning context.
The relationship of housing and long-term care will be addressed in the final articles.
The series will also include practical tools. One article will provide a simple worksheet for estimating the real cost of homeownership in retirement, while another will examine the financial math behind downsizing decisions.
Why This Matters for Federal Retirees
Federal employees often enter retirement with income from several sources: a FERS pension, Social Security benefits administered by the Social Security Administration, and withdrawals from retirement savings.
These income streams can provide stability. But long retirements—often lasting 25 to 30 years—mean spending patterns evolve.
Understanding those changes can make the difference between a retirement plan that works well on paper and one that works well in practice.
Looking Ahead
Retirement planning is often framed as an investment challenge. Yet the financial experience of retirement is shaped just as much by spending patterns, housing decisions, and the timing of major expenses.
This twelve-article series will explore those issues in detail, focusing particularly on the non-medical costs that can influence retirement budgets for decades.
The goal is not simply to highlight risks but to provide a clearer picture of how retirement finances—with regard to housing—actually unfold over time.
In the next article, we will begin with one of the most surprising findings in retirement research: why spending often falls in the middle of retirement—and then rises again later in life.
About the Series
All of the articles will be linked to each other as the series is published on FedSmith.
The articles are sequenced in an order that explores how housing is important to your retirement and eventual long-term care costs. Some of the subsequent articles will explore home ownership and speak to downsizing. Renters will face long-term care costs with or without owning a home, so those scenarios are covered. The idea is to showcase how a home or renting affects your retirement.
One of the neat things about FedSmith is that you can share ideas on how to improve the articles. Since the articles are online, any changes can be integrated into the content, resulting in enhanced content for the series. I encourage you to share feedback with me or in the comments at the end of each article.
Articles in This Series
Note: These links will be updated as the series is published on FedSmith
- Article 1: The Hidden Costs of Retirement: A New Series for Federal Employees
- Article 2: The Retirement Spending Smile: Why Expenses Fall—and Then Rise Again
- Article 3: The Retirement Housing Trap: Why Home Costs Often Rise Later in Life
- Article 4: How to Estimate the True Cost of Your Home in Retirement
- Article 5: Owning a Home Isn’t the Only Option: How Federal Retirees Can Plan for Renting
- Article 6: When Healthcare Becomes Your Largest Retirement Expense
- Article 7: Downsizing Math: When Moving Actually Saves Money
- Article 8: Why Long-Term Care Can Disrupt Retirement Plans
- Article 9: How Federal Retirees Should Plan for the Long-Term Care Insurance “Elimination Period Gap”
- Article 10: The Non-Medical Expense That Drives Long-Term Care Costs
- Article 11: No House, No Problem: Funding Long-Term Care with Financial Assets Alone
- Article 12: Self-Funding Long-Term Care Without Real Estate: You Need a Ladder
