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As people get closer to their 60s, they often think about transitioning into retirement — and doing so comes with an adjustment to the budget. While every individual has different spending habits during their golden years, it’s important to understand how much the typical retiree spends each month. Doing so allows us to plan smarter for aging and retirement, ultimately leading to living more comfortable lives in our later years.

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Average Retirement Spending

According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month. It also found that 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.

How Much Should You Plan To Spend in Retirement?

While the average monthly spending for retirees is helpful to know, it doesn’t necessarily indicate what your retirement will look like. Instead, you must look at your spending today to determine how much you’ll need during retirement.

Most retirement experts recommend using the 80% rule to determine how much money you’ll need. That means you should expect to use 80% of your pre-retirement income to cover expenses in retirement. This percentage considers that some pre-retirement expenses might fall off while you might pick up other expenses like travel and additional healthcare.

For example, let’s assume your current household income is $80,000. Factoring in the 80% rule, you’ll want to plan on needing at least $64,000 per year.

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Typical Expenses in Retirement

To better understand how much income you’ll need in retirement, you should understand what retirees spend most of their income on each month. Here are some of the biggest expenses you’ll have.


Unless you own your home and you’ve managed to pay off your mortgage, housing will be your biggest retirement expense. The BLS report found that, on average, people 65 and older spend $18,872 annually for housing. This represents 36.2% of your annual expenses.

If your housing expenses are higher than you’re comfortable with, you could consider downsizing into a smaller home. You could also consider moving somewhere that has lower housing prices. Once you’re retired, you have much more flexibility on where you live, especially if family and friends are in other parts of the country.


The next largest expense for retirees is transportation. This accounts for $7,160 yearly, or 13.7% of your overall expenses. If you’re no longer working, you could start using public transportation. Eliminating your car payment could help save a significant amount of money each year. If you’re married and you and your spouse both have cars, you could consider selling one and becoming a one-car household. Even though transportation costs can be significant, there are ways to lower the burden on your budget.


Healthcare expenses in retirement cost Americans an average of $7,030 each year, or 13.5% of their overall expenses. Healthcare is one expense that typically increases in retirement compared to earlier years. This is due to potential illnesses, medical procedures, and long-term care costs. Keeping up with preventative care can go a long way in helping minimize some potential expenses.


Food expenses comprise an average of $6,490, or 12.4% of your yearly expenses. Luckily, there are a lot of ways to reduce food costs. By meal planning each week, you can create a grocery list of everything you need and avoid any impulse buys. Meal planning also helps you avoid nights where you don’t know what to cook, which usually results in eating out. Couponing is another great way to reduce your food expenses. Most major grocery stores have an app with coupons, and you can also use shopping apps like Ibotta to save even more.


Utilities get a little more expensive once you retire. You will be at home more often and need the house at a more comfortable temperature. On average, Americans 65 and older spend $3,921, or 7.5% of their expenses. Simple things like ensuring your windows and doors have proper seals to avoid air loss and installing smart thermostats can help save you money on your heating and cooling bills.

The Bottom Line

As you make your way toward retirement, it can be helpful to understand how much the average person spends on different things. However, it’s essential to understand that one person’s spending can look a lot different than yours. Run the numbers and determine exactly how much money you’ll need based on your current expenses.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: Retirement Planning: How Much the Average 65-Year-Old Retiree Spends Monthly


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