Robert Nicholas—Getty Images
By Ruth Davis Konigsberg
November 23, 2015

When trying to figure out how much money you will need in retirement, the amount you plan to spend is obviously a huge factor. The general rule is that you will need approximately 80% of your preretirement income each year to live in the manner to which you were accustomed. The thinking goes that once you retire, you no longer have to make 401(K) or social security contributions. Certain costs associated with working—commuting, dry cleaning, eating out—will likely go down, while others, such as health care, will likely go up, although perhaps not immediately. This arc in spending was coined the “retirement spending smile” by David Blanchett at Morningstar.

But new research on household spending after retirement shows that there is no predictable pattern. Yes, on average, household spending shows a slow decline after retirement, but that’s because some households spend way less and a considerable number spend more—way more—than they did before retirement. According to this new data, from the Employee Benefit Research Institute, almost half of households surveyed (45.9%) spend more in the first two years of retirement. In fact, some seem to embark on an all-out splurge after they stop working, with 28% of households spending more than 120% percent of what they did in the years just before retirement. By the sixth year of retirement, 23% of households are still spending 120% more, and this pattern held true across all income levels.

What are people spending more on? As I have written about before, housing now takes up a larger percentage of retirees’ budgets, as more people maintain rather than pay off their mortgages.

A survey of 613,000 households age 55 and up of people who use Chase banking services sheds additional light on retirement spending. The results, published in August 2015, divide retirees into four different spending profiles. The most frugal spend most of their money at food and beverage retailers, including big box stores like Target. They have mostly paid off their mortgages and do not have high property tax bills. In other words, they are the ideal retiree, and the likely the model for the 80% income replacement rate.

The next largest category, called “the homebodies,” spend a disproportionate amount of income—on average 54%—on various housing expenses, including utilities, maintenance, repairs, mortgage, property taxes, renovations, homeowners insurance, even furniture. These people are living a little too large in their homes and constitute 30% of Chase households age 55 to 64 and 25% of the group age 65 and up. Then there are “the globetrotters,” who represent about 7% to 8% of all households age 65 and up and who devote on average 25% of their income to travel, a huge proportion to be spending on a nonessential activity. And finally, for about 6% of households age 65 and older, health care expenses absorb a significant share of their income, 28% on average.

In the end, then, it seems most likely that the overspending is happening not on basics such as food or health care but on other more discretionary lifestyle choices such as housing and travel. And while it’s understandable that after a lifetime of work, the newly retired may want to kick up their heels a bit, those first few years after stopping work are considered the retirement “risk zone” when your nest egg is most vulnerable to market shocks and mismanagement, both of which can greatly increase your chance of not having enough to last a lifetime. We should now also put up in that zone a warning sign about irrational and exuberant spending in those early retirement days.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

Read next: 5 Smart Things to Do the Minute You Retire

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