Senior spending statistics: how much will you spend in retirement?
Explore key statistics about retirement spending, the average retirement cost per month, and the types of expenses to expect.
Summary
The average amount of spending in retirement per month is between $3,813 and $4,345.
The top retirement expenses are housing, healthcare, food, and insurance.
The cost of living for retirees by state changes depending on the state in question.
Knowing how to spend money in retirement can be improved by having a financial advisor.
What is the average cost of spending in retirement?
According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335.
The average expenses in this age bracket were between $3,813 and $4,345 per month.
The expenses of younger retirees were greater than those of older retirees: $4,870 for people between the ages of 65 and 74 and $3,813 for those 75 and older.
Studies show that the average retirement spending per year is between 55% and 80% of a person's annual salary. Those with an active lifestyle will see an increase in spending of around 6% over those with a less active lifestyle.
15% of living expenses are related to healthcare expenses after retirement, year in and year out.
As the population approaches retirement age, they will find they need to adjust their spending habits and budgets to accommodate upcoming retirement expenses.
What are the top retirement expenses?
After leaving the workforce, there are a myriad of retirement expenses to consider.
Some of the most prevalent ones include healthcare, medical insurance, housing, transportation, food, and debt repayment.
What is the cost of healthcare in retirement?
Healthcare can be one of the biggest retirement expenses.
A typical couple aged 65 who retired in 2023 faces long-term medical expenses of approximately $315,000.
Individuals should plan for over-the-counter medications, long-term care, and dental care costs.
Medicare may pay for some health care in retirement but does not cover all of it. HSA funds and long-term care insurance can help consumers prepare for healthcare planning costs.
In total, the median retiree spent $4,311 on medical expenses.
In 2022, the monthly premium for Medicare Part B, which is medical insurance, was $170.10.
The cost of retirement is often dominated by healthcare expenses, increasing the need for a solid medical and healthcare insurance plan.
What is the cost of housing in retirement?
Another cost that adds to the average retirement budget is housing. Housing - which includes mortgage, rent, property tax, insurance, maintenance, and repair costs - is the largest cost of retirement.
The average retiree household spends an average of $17,472 per year ($1,456 per month) on housing expenses, which represent almost 35% of annual expenditures.
In 2021, federal housing subsidies only reached 36.5% of eligible older households. Nearly 20% of older adults are putting more than 30% of their income toward housing, with more than 11 million households headed by people over 65.
Many people over 65 move into a retirement community, but the average cost per month varies greatly depending on the location, type of housing, and amenities offered.
Retiring to a senior living community may also entail paying an upfront fee, monthly fees, or both. The upfront fee can range from $100,000 to $1 million, depending on what's covered.
What is the cost of transportation in retirement?
Transportation in retirement can include vehicles, gas, insurance, maintenance and repairs, car rental, leases, payments, and public transportation.
The average retiree household spends $7,492 a year ($624 a month) on transportation compared to $10,742 ($895 a month) for the average U.S. household.
Almost 80% of seniors over age 65 live in car-dependent suburban and rural communities, yet transportation is often one of the most overlooked costs of the average retirement budget.
On average, gasoline and motor oil cost $1,757 per year, vehicle insurance totals $1,063, and maintenance/repairs amount to $798.
What is the cost of utilities in retirement?
The fifth-largest cost of average retirement spending per year is utilities.
This category includes gas, electricity, water, phone, and Internet charges.
Retiree households spend an average of $3,810 annually versus $4,055 usual households spend.
What is the cost of food in retirement?
Senior spending statistics show that older households spend an average of $7,306 per year on food. This includes the food they eat at home ($4,797) and eating out ($2,509).
This figure is lower than the average of $9,343 in total food spending by all households overall, which included $5,703 for food at home and $3,639 for food away from home.
A survey revealed that 26% of respondents 55 and older regularly get senior discounts at stores, restaurants, and other businesses. 22% have done so many times. 21% said they had gotten a senior discount at least once in the past. 31% have never gotten a discount.
McDonald’s, Denny’s, and Golden Corral were the top brands mentioned for senior discounts. Those discounts can certainly have a big impact on buying behaviors. 65% said that they are more likely to patronize businesses that offer senior discounts for which they qualify.
How do you manage debt in retirement?
Besides a mortgage, many retirees will find they still carry debt into retirement, such as auto loans.
Credit card debt is the most common form of debt, with over 40% of adults 65 and over reporting credit card debt, 30% a mortgage, 23% a car loan, 11% medical debt, and 4% student loan debt.
43% of retirees described their debt as “manageable” in 2022, 46% of retirees described their debt as “easily manageable” in 2022, and 11% of retirees reported their debt was “unmanageable” or “crushing.”
How much do you need to retire in each state?
The average retirement spending per year fluctuates from state to state.
The following breakdown explains the cost of living for retirees by state, including an additional cash buffer of 20% of that total, which was added to ensure that retirees would be “comfortable,” according to the GoBankingRates study.:
Alabama
Total expenditures: $45,415
20% comfort buffer: $11,354
Cost of a comfortable retirement annually: $56,769
Alaska
Total expenditures: $65,437
20% comfort buffer: $16,359
Cost of a comfortable retirement annually: $81,796
Arizona
Total expenditures: $56,312
20% comfort buffer: $14,078
Cost of a comfortable retirement annually: $70,390
Arkansas
Total expenditures: $47,083
20% comfort buffer: $11,771
Cost of a comfortable retirement annually: $58,854
California
Total expenditures: $72,320
20% comfort buffer: $18,080
Cost of a comfortable retirement annually: $90,399
Colorado
Total expenditures: $54,852
20% comfort buffer: $13,713
Cost of a comfortable retirement annually: $68,565
Connecticut
Total expenditures: $60,171
20% comfort buffer: $15,043
Cost of a comfortable retirement annually: $75,213
Delaware
Total expenditures: $54,957
20% comfort buffer: $13,739
Cost of a comfortable retirement annually: $68,696
District of Columbia
Total expenditures: $79,984
20% comfort buffer: $19,996
Cost of a comfortable retirement annually: $99,980
Florida
Total expenditures: $54,487
20% comfort buffer: $13,622
Cost of a comfortable retirement annually: $68,109
Georgia
Total expenditures: $46,353
20% comfort buffer: $11,588
Cost of a comfortable retirement annually: $57,942
Hawaii
Total expenditures: $96,982
20% comfort buffer: $24,246
Cost of a comfortable retirement annually: $121,228
Idaho
Total expenditures: $51,567
20% comfort buffer: $12,892
Cost of a comfortable retirement annually: $64,459
Illinois
Total expenditures: $47,918
20% comfort buffer: $11,979
Cost of a comfortable retirement annually: $59,897
Indiana
Total expenditures: $47,031
20% comfort buffer: $11,758
Cost of a comfortable retirement annually: $58,789
Iowa
Total expenditures: $45,988
20% comfort buffer: $11,497
Cost of a comfortable retirement annually: $57,485
Kansas
Total expenditures: $45,519
20% comfort buffer: $11,380
Cost of a comfortable retirement annually: $56,899
Kentucky
Total expenditures: $48,387
20% comfort buffer: $12,097
Cost of a comfortable retirement annually: $60,484
Louisiana
Total expenditures: $48,752
20% comfort buffer: $12,188
Cost of a comfortable retirement annually: $60,940
Maine
Total expenditures: $59,701
20% comfort buffer: $14,925
Cost of a comfortable retirement annually: $74,627
Maryland
Total expenditures: $64,707
20% comfort buffer: $16,177
Cost of a comfortable retirement annually: $80,884
Massachusetts
Total expenditures: $78,159
20% comfort buffer: $19,540
Cost of a comfortable retirement annually: $97,699
Michigan
Total expenditures: $47,813
20% comfort buffer: $11,953
Cost of a comfortable retirement annually: $59,767
Minnesota
Total expenditures: $49,586
20% comfort buffer: $12,397
Cost of a comfortable retirement annually: $61,983
Mississippi
Total expenditures: $44,059
20% comfort buffer: $11,015
Cost of a comfortable retirement annually: $55,074
Missouri
Total expenditures: $46,979
20% comfort buffer: $11,745
Cost of a comfortable retirement annually: $58,724
Montana
Total expenditures: $54,904
20% comfort buffer: $13,726
Cost of a comfortable retirement annually: $68,631
Nebraska
Total expenditures: $47,500
20% comfort buffer: $11,875
Cost of a comfortable retirement annually: $59,376
Nevada
Total expenditures: $53,132
20% comfort buffer: $13,283
Cost of a comfortable retirement annually: $66,415
New Hampshire
Total expenditures: $59,806
20% comfort buffer: $14,951
Cost of a comfortable retirement annually: $74,757
New Jersey
Total expenditures: $59,441
20% comfort buffer: $14,860
Cost of a comfortable retirement annually: $74,301
New Mexico
Total expenditures: $48,908
20% comfort buffer: $12,227
Cost of a comfortable retirement annually: $61,135
New York
Total expenditures: $70,755
20% comfort buffer: $17,689
Cost of a comfortable retirement annually: $88,444
North Carolina
Total expenditures: $50,525
20% comfort buffer: $12,631
Cost of a comfortable retirement annually: $63,156
North Dakota
Total expenditures: $50,785
20% comfort buffer: $12,696
Cost of a comfortable retirement annually: $63,482
Ohio
Total expenditures: $46,614
20% comfort buffer: $11,654
Cost of a comfortable retirement annually: $58,268
Oklahoma
Total expenditures: $45,206
20% comfort buffer: $11,302
Cost of a comfortable retirement annually: $56,508
Oregon
Total expenditures: $63,716
20% comfort buffer: $15,929
Cost of a comfortable retirement annually: $79,645
Pennsylvania
Total expenditures: $51,202
20% comfort buffer: $12,801
Cost of a comfortable retirement annually: $64,003
Rhode Island
Total expenditures: $57,981
20% comfort buffer: $14,495
Cost of a comfortable retirement annually: $72,476
South Carolina
Total expenditures: $50,212
20% comfort buffer: $12,553
Cost of a comfortable retirement annually: $62,765
South Dakota
Total expenditures: $50,108
20% comfort buffer: $12,527
Cost of a comfortable retirement annually: $62,634
Tennessee
Total expenditures: $47,083
20% comfort buffer: $11,771
Cost of a comfortable retirement annually: $58,854
Texas
Total expenditures: $48,283
20% comfort buffer: $12,071
Cost of a comfortable retirement annually: $60,353
Utah
Total expenditures: $53,184
20% comfort buffer: $13,296
Cost of a comfortable retirement annually: $66,480
Vermont
Total expenditures: $60,692
20% comfort buffer: $15,173
Cost of a comfortable retirement annually: $75,865
Virginia
Total expenditures: $53,236
20% comfort buffer: $13,309
Cost of a comfortable retirement annually: $66,545
Washington
Total expenditures: $59,441
20% comfort buffer: $14,860
Cost of a comfortable retirement annually: $74,301
West Virginia
Total expenditures: $46,823
20% comfort buffer: $11,706
Cost of a comfortable retirement annually: $58,528
Wisconsin
Total expenditures: $48,960
20% comfort buffer: $12,240
Cost of a comfortable retirement annually: $61,200
Wyoming
Total expenditures: $47,792
20% comfort buffer: $11,948
Cost of a comfortable retirement annually: $59,741
How can you budget for retirement?
One in four Americans has nothing saved for retirement.
According to experts, individuals often go through four designated retirement phases. Within each phase, changing income and expenses require different budgeting approaches.
A four-phase retirement model consists of pre-retirement (age 50 to 62 or so), the early period of retirement (age 62 to 70), middle retirement (age 70 to 80), and late retirement (age 80 and up).
Common considerations for budgeting for seniors include housing, healthcare, entertainment, taxes, debt, travel and hobbies, home modifications, family support, and inflation.
Some expenses change in retirement. While transportation and housing costs often drop, healthcare and entertainment may go up.
To cover the cost of retirement at each stage, creating a retirement budget plan based on the four key phases is advisable. This entails adding up all income streams, carefully planning the distribution of funds, planning for healthcare expenses, and creating a zero-based monthly budget by totaling monthly income and deducting your expenses so that no funds are left over.
Doing so will help you to budget for and manage your average retirement spending over time.
Get expert financial advice
Senior spending statistics can give you key insights into average retirement budgets and how to spend money in retirement wisely.
To learn more about retirement economics and prepare for the financial side of life after the workforce, it’s best to get expert financial advice.
Unbiased can match you with an SEC-regulated financial advisor who will offer professional guidance and support.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.