How much does it cost to get by in retirement? Not a whole lot less than it does before retirement.
U.S. households led by someone who is 65 or older spend $64,445 a year — $5,370 a month — on average. That’s according to the latest federal data on consumer spending by calendar year, which is for 2025.
By comparison, the average across all households is $81,905.
Older households’ spending eats up about 93% of their average pretax income of $69,497, compared with about 74% for all households.
Social Security alone falls short of covering it. The average retired worker will get $2,170 a month after the 2027 cost-of-living adjustment, up from $2,095 a month in 2026. Couples who both receive benefits will get $3,355 a month on average in 2027, up from $3,238 in 2026.
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 — about 36% — is related to housing. That translates to an average of $23,430 per year, which compares with $27,790 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.
2. Transportation
Commuting expenses might shrink when you retire, but that doesn’t mean all of your transportation costs will.
Older households spend an average of $10,109 on transportation costs such as vehicles, gas and insurance. That means these costs collectively account for 15.7% of all their spending, on average.
Across all households, the average spending on transportation is $13,492 per year.
3. Food
Older households spend an average of $8,226 per year on food, accounting for about 12.8% of all their spending. That dollar amount includes both the food they eat at home ($5,408) and eating out ($2,818).
That’s lower than the average of $10,633 in total food spending by households overall, which included $6,491 for food at home and $4,142 for food away from home.
4. Healthcare
Now, here’s an example of an expense that increases in retirement. Older households spend an average of $7,986 on healthcare annually, accounting for about 12.4% of their spending. Compare that with an average of $6,470 spent by all households.
The bulk of consumers’ healthcare spending — for both older households and the average household across all ages — goes for insurance. The rest is on medical services, medical supplies and drugs.
5. Utilities and public services
Older households spend an average of $4,680 per year on utilities such as natural gas and electricity, and services such as phones and water, accounting for 7.3% of all their spending.
By comparison, the average spent on utilities across all households is $4,931 per year.
6. Cash contributions
Older households give away an average of $3,311 per year, accounting for about 5% of their spending. That’s about 48% more than the $2,237 average across all households.
This category covers money given to people and organizations outside the household, such as charities, religious groups and family members, including students living away at school.
7. Entertainment
Older households spend an average of $2,975 per year on entertainment, accounting for about 5% of their expenditures. That compares with an average of $4,084 across all households.
This category includes not only things like movie tickets and TV subscriptions, but also pet-related expenses, personal hobbies and recreational vehicles.
8. Household operations
Older households spend an average of $1,935 per year on household operations — accounting for about 3% of all their expenditures — compared with an average of $2,034 across those of all age groups.
Expenses such as pest control, storage, gardening and lawn care services, home security and appliance repairs fall into this category.
9. Household furnishings and equipment
Older households spend an average of $1,876 per year on household furnishings and equipment, including appliances and rugs, accounting for 2.9% of all their expenditures.
That’s compared with an average of $2,355 per year across all households.
10. Apparel and services
Older households spend an average of $1,383 per year on apparel and related services such as dry cleaning, sewing, and jewelry repair, accounting for about 2% of all their expenditures.
That compares with an average of $2,010 across all households.
Add a Comment