Retirees on average spend less as they age but at the same time there are changes in demands on their finances, according to an Employee Benefits Research Institute analysis that could have implications both for pre-retirement savings in advance of retirement and strategies for using funds afterward.

The study used spending levels at age 65 as a benchmark and found that on average, household expenses declined by a fifth by age 75, by a third by age 85 and by half by age 95. On average, retired households spent about 80 percent of what working households spent.

Home-related expenses were the largest spending category for every age group, and the percentage remained roughly the same at differing ages—at about 40 percent. Food and clothing expenses, as a share of total expenses, also remained basically flat across different age groups.

Health care was the second-largest component and the only one that increases with age, underscoring the importance of good health insurance coverage in retirement. While health care expenses started at about 10 percent at age 65, that percentage was double for those age 85 and older.

That percentage would be even higher if the cost of institutional care were included, the study added. It noted that while almost everyone age 65 and older is eligible for Medicare, that program is not comprehensive and comes with many out of pocket costs, making supplemental insurance, such as FEHB for federal retirees, all the more valuable.

Expenses that tended to fall with age primarily included transportation and entertainment; part of each decline relates to decreased mobility.

The study added that while 66 percent of households studied experienced a drop in their spending after retirement—for reasons such as no longer incurring commuting expenses—16 percent actually experienced an increase in costs. In addition, even those who have planned for a certain level of retirement income and will achieve that level could be vulnerable if certain events occur–for example, a need for long-term care not covered by insurance.