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What is the average monthly retirement expenses?

Retirement is an exciting phase of life when you get to enjoy the fruits of decades of hard work. However, it also requires careful planning to ensure you can cover your living expenses on a fixed income. Knowing the average monthly costs in retirement can help you create a realistic budget and withdrawal strategy.

How Much Does the Average Retiree Spend Per Month?

According to the Bureau of Labor Statistics’ Consumer Expenditure Survey, the average retiree household (aged 65 and older) spends $46,668 per year on total expenses. That equates to around $3,889 per month.

However, expenses can vary significantly based on factors like:

  • Geographic location
  • Household size
  • Health status
  • Debt levels
  • Lifestyle choices

For example, average retirement spending is higher in major metropolitan areas compared to rural locations. Average monthly spending ranges from $2,800 for single adults to $4,300 for retiree couples.

Breakdown of Average Monthly Retirement Expenses

Housing and healthcare take up the biggest shares of the average retiree’s budget. However, there are several other major categories that add up.


Housing accounts for the largest chunk at $15,771 per year or $1,314 per month. This includes expenses like:

  • Rent/mortgage payments
  • Property taxes
  • Maintenance and repairs
  • Homeowners/renters insurance
  • Utilities like gas, electric, water, etc.

Many retirees own their home outright and no longer have a mortgage payment. However, it’s important to budget for upkeep, property taxes, insurance, and utilities when estimating retirement housing costs.


Healthcare is the second-largest category at $6,833 per year or $569 per month on average. Out-of-pocket costs may include:

  • Medicare premiums
  • Supplemental insurance
  • Prescription drugs
  • Dental and vision care
  • Co-pays and deductibles

Keep in mind that Medicare does not cover several key services like dental, vision, hearing aids, and long-term care. Retirees need to budget for these additional health costs.


Getting around takes up $7,687 per year or $641 per month for the average retiree. Expenses include:

  • Car payments
  • Fuel costs
  • Maintenance and repairs
  • Auto insurance
  • Public transportation

Driving often declines with age. However, transportation remains a significant expense line item in most retirement budgets.


Groceries and dining out cost $6,602 per year or $550 per month. Food consumed at home takes up a larger share for most retirees compared to restaurant meals. But food costs still rank among the top expenses.


Leisure and recreational activities cost retirees approximately $2,926 per year or $244 per month. This includes expenses like:

  • Fees for clubs, gyms, or classes
  • Hobbies
  • Books, music, movies
  • Travel and vacations
  • Sporting events/concerts

Entertainment budgets often increase in retirement as people have more free time. It’s important to budget for fun in retirement.

Miscellaneous Goods and Services

Retirees spend around $2,573 per year or $214 per month on other items like:

  • Clothing and footwear
  • Personal care products
  • Household supplies
  • Tobacco and alcohol
  • Pet care
  • Gifts and contributions

This omnibus category captures the many smaller day-to-day expenses that add up.

How Retirement Spending Changes With Age

Retirement spending is not necessarily constant. Expenses change as retirees grow older. According to the Employee Benefit Research Institute (EBRI), spending declines after around age 80.

A 2021 EBRI study found that average household spending peaks at $61,842 for retirees aged 75-79. It then drops to $51,252 for retirees 80-84 and $44,699 for those over 85.

Why does spending decrease in later retirement years? There are several factors:

  • Mobility decreases, reducing transportation costs
  • Household size shrinks as spouses pass away
  • Less frequent travel and entertainment activities
  • Declining health leads to lower provider costs
  • Less spending on home maintenance

However, healthcare costs do tend to rise again near the end of life. Long-term care like nursing homes and home health aides also become more likely for very elderly retirees.

How To Budget for Retirement Based on Average Expenses

Looking at average retirement spending can serve as a helpful baseline when constructing your own budget. But you still need to consider your unique situation including:

  • Debt going into retirement
  • Income sources like Social Security and pensions
  • Assets and projected investment withdrawals
  • Plans for travel or big-ticket purchases
  • Potential long-term care needs

A retirement budget calculator can help you estimate your personal spending. Be sure to include some buffer for unexpected expenses. It’s also smart to review your budget annually and adjust for changing costs and needs.

Tips for Aligning Spending with Your Retirement Budget

  • Track your actual spending to identify waste
  • Set up automatic transfers to investment/savings accounts
  • Downsize to cut housing expenses if needed
  • Move to a tax-friendly and low cost-of-living state
  • Pay off debts like mortgage and credit cards
  • Consider getting a side gig for extra income


Estimating average monthly retirement expenses can serve as a useful starting point. But most experts recommend developing a personal budget tailored to your unique situation and priorities. This requires looking at all sources of income, essential and discretionary expenses, and planned retirement activities. Retirees also need to build in flexibility for fluctuating costs and ensure their savings and withdrawals align with their budgeted spending needs.