How Much Do Average Retirees Spend Each Year?

Retirement

How Much Do Average Retirees Spend Each Year?

Posted by Infinite Wealth Advisors, LLC
1 week ago | October 11, 2021

When you’re planning for retirement, it can feel natural to focus on meeting a specific savings goal. But we should actually be looking at your expected spending in retirement first, and then using that information to determine a retirement savings plan.

So, how can you predict your budget years from now? No one can analyze the future perfectly, but we have several ways of making some very educated guesses. One way to do that is by looking at the spending habits of the average retiree household.

According to federal data on consumer spending, the average retiree household spent $47,579 in 2020. Compare that to the average across all households, which was calculated at $61,334, and you can see that spending does drop a bit in retirement, but perhaps not as much as you would have expected.

Where does all that money go? Again, these figures are only averages, but the data broke down accordingly:

  • Housing – $17,435 for retirees, and $21,409 for all households
  • Health care – $6,668 for retirees, and $5,177 for all households
  • Transportation – $6,221 for retirees, and $9,826 for all households
  • Food (both groceries and restaurant meals) – $5,698 for retirees, and $7,316 for all households
  • Utilities and public services – $3,783 for retirees, and $4,158 for all households

You’re probably not surprised to see that most spending does fall a bit in retirement, but perhaps not as much as you had hoped! And of course, the out-of-pocket spending on health care does tend to rise as we get older. That’s not surprising, but you still don’t want to find yourself shocked by medical bills, so plan carefully with regard to Medicare and supplemental plans, and remember that you will always pay for some portion of these expenses yourself.

As you plan your retirement budget, stay in touch with us. We can help you determine a savings goal and take other steps to establish streams of income in retirement.

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