Here’s How Much Retiree Households Spend in a Year

Retiree reviewing financial documents in his kitchen
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How much does it cost to get by in retirement? Not a whole lot less than it did before retirement.

U.S. households led by someone who is 65 or older spend a $47,579 a year, on average. That’s according to the latest federal data on consumer spending, which is for 2020.

By comparison, the average across all households is $61,334.

So, where is all that money going every golden year? The biggest expenses for older households are many of the same as those for younger Americans.

1. Housing

More than one-third of older-household spending is related to housing. That translates to an average of $17,435 per year, which compares with $21,409 for the average U.S. household.

That spending includes rent and mortgage costs as well as hidden homeowner costs such as property taxes, insurance, maintenance and repairs. It does not include utilities — which are detailed in section No. 5.

2. Health care

Now, here’s an example of an expense that increases in retirement. Older households spend an average of $6,668 on health care annually — compared with an average of $5,177 spent by all households.

The bulk of consumers’ health care spending — for both older households and the average household across all ages — is on insurance. The rest is on medical services, medical supplies and drugs.

For a more detailed breakdown, check out “Here’s How Much Seniors Actually Spend on Health Care.

3. Transportation

Commuting expenses might shrink when you retire, but that doesn’t mean all transportation costs will.

Older households spent an average of $6,221 on transportation costs such as vehicles, gas and insurance in 2020.

That figure for last year is lower than usual, too, presumably due to folks of all ages driving less amid the COVID-19 pandemic. (The average was $7,492 in 2019 and $7,270 in 2018.) In fact, transportation is usually the second-largest expense, above health care.

Across all households, the average spending on transportation was $9,826 in 2020.

4. Food

Older households spend an average of $5,698 per year on food, including both the food they eat at home ($4,204) and eating out ($1,494).

That’s lower than the average of $7,316 in total food spending by all households overall.

5. Utilities and public services

Older households spend an average of $3,783 per year on utilities like natural gas and electricity, and services such as phone and water.

By comparison, the average spent across all households is $4,158.

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