Retirement Planning Tips: How Much an Average Person 65 and Older Spends Every Month

Most retirement planning starts from the wrong end. People obsess over the size of the nest egg, the 401(k) balance, the magic number, while treating the spending side as an afterthought they’ll figure out later. That’s backward. Your monthly spending determines how much you actually need, how long your money lasts, and whether your plan survives contact with reality. Get that estimate wrong by even $1,000 a month and the error compounds into hundreds of thousands of dollars over a 25-year retirement.

The good news is that you don’t have to guess. The federal government tracks what Americans 65 and older actually spend, category by category, and the latest full-year data paints a remarkably detailed picture.

The headline?

The average household headed by someone 65 or older spent $61,432 in 2024, or about $5,120 a month, per the Bureau of Labor Statistics’ Consumer Expenditure Survey released in late 2025.

That number is a useful anchor. It’s also misleading on its own. It’s a household figure covering roughly 1.7 people, so it overstates what a single retiree spends. It combines 66-year-olds still taking European river cruises with 88-year-olds who rarely leave their zip code. And it’s an average, pulled upward by a small group of very high spenders. A study conducted by the Employee Benefit Research Institute has found that roughly half of retirees spend less than $2,000 a month.

This article breaks the average into its parts – how spending differs at 65 versus 75, where each dollar actually goes, how the income side measures up, and how to convert national data into a monthly number that fits your own life. Start with the age split, because it changes how you should read everything that follows.

See the real numbers behind the average

Households headed by someone aged 65 to 74 spent $65,354 in 2024, or about $5,446 a month. Households headed by someone 75 or older spent $55,834, or roughly $4,653 a month. That’s nearly $800 less per month between the two groups.

For context, households in the 55 to 64 bracket spent $84,946 that same year. Spending drops about 23% in the decade after 65 compared with the decade before, then keeps sliding.

Now for the statistic that deserves more attention than it gets. When the BLS sorts households by occupation rather than age, households that identify as “retired” reported average pretax income of $57,622 and average spending of $59,616 in 2024. Read that again. The average retired household spends about $2,000 a year more than it brings in.

Working households run the opposite pattern, with income comfortably above spending because taxes and savings absorb the difference. Retirees close their gap by drawing down assets. That’s not a crisis by itself; spending savings is precisely what savings are for. But it reframes the planning question. You’re not budgeting to live within an income. You’re budgeting to manage a controlled drawdown, which is a fundamentally different exercise with different failure modes.

One more layer before moving on: the distribution around these averages is enormous. Survey research from EBRI shows nearly half of retirees spending under $2,000 a month, about a third landing between $2,000 and $4,000, and fewer than one in five spending above $4,000. The “average retiree” spending $5,120 a month is, in a real sense, a statistical composite that relatively few actual households resemble. When you build your own plan, the question is never whether you’ll match the average. The question is which part of the distribution your fixed costs, health, and lifestyle place you in.

Know how spending actually changes from 65 to 75

The retirement budget 65 vs 75 comparison matters because most people plan for a flat line. They estimate one monthly number and project it forward for 30 years, adjusted for inflation. Actual retiree behavior looks nothing like that.

Research from RAND, using the University of Michigan’s Health and Retirement Study, found that real household spending declines after age 65 at annual rates of about 1.7% for single retirees and 2.4% for couples. Notably, this decline shows up broadly across wealth levels, not just among retirees running short on money, which suggests it’s driven by factors like changing health and priorities rather than financial necessity alone.

Separate analysis of the 2024 Consumer Expenditure Survey by David Blanchett, Prudential’s head of retirement research, puts a sharper point on where that decline lands. Households aged 75 and older spend about $53,031 annually on average, compared with $97,319 for the 45-to-54 age bracket, the highest-spending group in the data.

The decline isn’t uniform across categories, though. That’s where it gets interesting for planning purposes.

• Discretionary spending falls hard: Travel, dining out, and vehicle spending decline steadily as retirees age; clothing follows a similar downward path.
• The budget share shifts, even as the total shrinks: Blanchett’s analysis found that households aged 75 and older devote a larger share of spending to healthcare, housing, and cash contributions, and a smaller share to transportation, insurance, and pensions, compared with younger households.
• Healthcare moves the other way: Households under 35 devote less than 5% of spending to healthcare, while those 75 and older devote roughly 15%, and the dollar amount keeps rising even as total spending falls. More on that shortly.

Some researchers describe the full lifetime pattern as a “spending smile”; high in the active early years, dipping through the middle, then curling upward late in life if long-term care enters the picture. The smile matters because the two expensive phases require different funding strategies. Early retirement spending is discretionary and controllable. Late-life spending is medical and largely isn’t.

The planning implication is direct. If you budget a flat $5,400 a month from 65 to 95, you’ll likely underspend in your healthiest, most mobile years and misjudge the shape of the risk in your final ones. A better approach front-loads travel and lifestyle money into the first decade, lets the middle years run leaner, and holds a separate reserve for the late-life care scenario.

See where the money actually goes each month

Ask any financial planner to describe a retiree’s typical costs, and housing will top the list every time. The 2024 BLS data backs them up. Here’s the full breakdown of average monthly expenses in retirement for the 65-and-older group.

1. Housing: $1,849 a month

Housing consumed about 36% of the average retiree budget in 2024, at roughly $22,200 a year. This surprises people who assume a paid-off mortgage solves the problem.

It doesn’t. Property taxes, homeowners insurance, utilities, maintenance, and repairs continue regardless of mortgage status, and two of those have been climbing faster than general inflation in much of the country. Insurance premiums in Florida, Texas, and parts of California have jumped sharply in recent years. Property tax reassessments follow home values upward. A mortgage-free retiree in a high-tax county can still face $1,200 or more in monthly carrying costs on a home they own outright.

The house is also the expense category where retirees have the most leverage. Downsizing, relocating to a lower-tax state, or moving closer to family can shift the entire budget by four figures a month. No amount of coupon-clipping in other categories comes close.

2. Transportation: $795 a month

This line item catches nearly everyone off guard. Transportation was the second-largest retiree expense in 2024, ahead of both food and healthcare, at roughly $9,500 a year.

Vehicle purchases, financing, insurance, fuel, and maintenance add up quickly for a two-car household. Auto insurance premiums rose faster than almost any other consumer category through 2023 and 2024. The practical question worth asking in your own plan – does a retired couple actually need two vehicles? Dropping to one can free up $400 to $600 a month between insurance, depreciation, and running costs. It’s one of the few painless cuts available.

3. Food: $662 a month

Food ran about $7,900 a year for the average 65-plus household. The split between groceries and restaurants shifts steadily with age, as noted earlier, and this category tracks general inflation closely. Not much strategy here beyond awareness. It’s a stable, predictable line.

4. Healthcare: $650 a month, with an asterisk the size of a house

The BLS puts average retiree healthcare spending at $7,799 a year, about 12.7% of the budget. Treat that number carefully. It’s an annual average across healthy and sick years, and it dramatically understates the lifetime commitment.

Fidelity’s 2025 Retiree Health Care Cost Estimate puts the figure a single 65-year-old should expect to spend on healthcare across retirement at $172,500, after taxes. For a couple, roughly $345,000. That estimate covers Medicare premiums, deductibles, copays, and prescriptions. It explicitly excludes long-term care, so the true worst-case number is well above it.

There’s also a coverage decision at 65 that shapes this line item for the rest of your life. Retirees choosing between original Medicare with a Medigap supplement and a Medicare Advantage plan are really choosing between two cost profiles. The Medigap route means higher, predictable monthly premiums and very little out-of-pocket exposure. Advantage plans often carry low or zero premiums but shift costs to copays and annual out-of-pocket maximums that can run several thousand dollars in a bad health year. Neither is universally better. But the choice locks in early, because switching from Advantage back to Medigap later can trigger medical underwriting in most states. It’s a one-way door that deserves more deliberation than it usually gets.

Two structural details make healthcare the budget category that behaves worst over time. First, medical inflation runs 5% to 6% annually against roughly 3% for general prices, so this line grows faster than everything else in your budget, every year, compounding. Second, Medicare is less comprehensive than most pre-retirees assume. It doesn’t cover dental, vision, hearing aids, or custodial long-term care. The standard Part B premium reached $202.90 a month in 2026, and it’s deducted from your Social Security check before the money ever hits your account. Higher earners pay more through IRMAA surcharges, a detail that trips up retirees with large IRA balances once required distributions begin.

5. Everything Else: Roughly $1,160 a month

The remainder covers entertainment (about $252 a month, including pets, streaming, club memberships, and events), cash contributions to family and charity, personal insurance, apparel, and miscellaneous spending. Entertainment is worth flagging because it stays remarkably durable in retiree budgets. People protect their leisure spending, and honestly, they should. It’s the point of the exercise.

Look beyond Social Security on the income side

Spending is only half the ledger. The cost of living for retirees has to be measured against what actually comes in, and here the numbers get uncomfortable fast.

The average Social Security retirement benefit reached about $2,083 a month by mid-2026, just under $25,000 a year. Set that against the $61,432 average annual spend and Social Security covers roughly 40% of what the average 65-plus household actually spends. For the 65-to-74 group, it covers even less.

Income also falls with age, and it falls faster than spending does. Census data for 2024 shows median income of $65,100 for households aged 65 to 74, dropping to $47,790 for those 75 and older. Part of that decline reflects the death of a spouse, which typically eliminates one Social Security check while leaving most household fixed costs intact. Widowhood is one of the most undermodeled financial events in retirement planning, and it deserves an explicit line in any serious projection.

There’s a timing problem inside Social Security worth knowing about too. Annual cost-of-living adjustments are backward-looking, calculated from the prior year’s inflation and applied the following January. When prices spike, retirees absorb higher costs for months before the adjustment catches up, and the index used to calculate it tracks workers’ spending rather than seniors’. Because retirees devote a larger share of their budget to medical care, the official adjustment routinely trails their lived inflation. Over a 25-year retirement, that small annual drag compounds into real losses in purchasing power.

The gap between Social Security and actual spending gets filled from three places – pensions for the shrinking minority who have them, portfolio withdrawals, and part-time work. For most mid-career professionals reading this, the portfolio carries the load. Which means the real planning question isn’t “what will I spend each month?” It’s “what sustainable withdrawal, layered on top of Social Security, covers my projected monthly expenses in retirement across three distinct spending phases.” That’s a harder question. It’s also the right one.

Turn the averages into your own number

National averages are a calibration tool, nothing more. Your actual figure will deviate from $5,120 per month for reasons the survey data can’t capture. Here’s how to build a number you can trust.

• Start with your current spending, not a rule of thumb: The old “you’ll need 80% of pre-retirement income” heuristic is blunt. Pull 12 months of actual bank and card statements instead. Most people who do this for the first time discover they’ve been underestimating their spending by 15% to 20%, because irregular costs like home repairs, insurance premiums, and gifts don’t feel like monthly spending even though they are.
• Subtract what genuinely disappears: Payroll taxes, retirement contributions, commuting, work wardrobe, and possibly a mortgage if the payoff date lands before retirement. For a high saver, these deductions are substantial. Someone saving 25% of gross income needs far less replacement income than their salary suggests.
• Add what appears: Health insurance before Medicare eligibility at 65 is the big one; private coverage for a couple in their early 60s can exceed $2,000 a month. Then add expanded travel, hobbies, and the healthcare escalator discussed above.
• Adjust for geography and housing: A household spending $5,100 a month in Des Moines and one spending $5,100 in San Diego are living very different lives. If relocation is on the table, model it explicitly. It’s the single largest lever you control.
• Then split the result into fixed and flexible: This step is where the exercise shows results. Fixed costs like housing, insurance, and utilities must be covered in every market environment, so match them to reliable income sources: Social Security, a pension, or an annuity if the gap warrants one. Flexible costs like travel and dining can flex with portfolio performance. Retirees who structure their budget this way can cut spending 10% to 15% in a down market without touching anything essential, and that flexibility measurably improves how long a portfolio lasts.

A quick worked example makes the arithmetic concrete. Take a couple currently earning $160,000 who save 20% and pay $18,000 a year on a mortgage that retires with them. Strip out savings, payroll taxes, and the mortgage, and their true consumption is closer to $95,000 than $160,000. Add back $8,000 for expanded early-retirement travel and layer in the healthcare escalator, and a realistic first-decade budget lands near $8,500 a month, tapering toward $6,500 in their late 70s. Notice how far both numbers sit from any national average. That’s the point.

One caution on inflation as you project forward. Standard plans inflate everything at a single rate, usually 2.5% to 3%. Retiree inflation doesn’t behave that way. Healthcare rises at roughly double the general rate, while many discretionary categories barely move. A budget weighted toward medical costs, as budgets increasingly are after 75, experiences a personal inflation rate meaningfully above the CPI. Using one blended rate for a 30-year projection quietly understates the late-life numbers.

Run all of that and you’ll have something the BLS can’t give you: a personal baseline, sorted into fixed versus flexible costs, that you can stress-test against the 65 vs 75 spending curve.

Plan for the curve, not the average

If you take one thing from the numbers, take this: retirement spending is a curve, and most of the risk lives at the two ends of it.

That insight leads to a handful of planning moves that rarely make it into articles about average spending, and they matter more than the averages themselves.

• Match your money to the curve: The early, high-spending years pair well with guaranteed income and near-term reserves, since a market crash in your first five years of withdrawals does disproportionate damage. Advisors call this sequence-of-returns risk, and it’s the reason two retirees with identical portfolios and identical average returns can end up in wildly different places depending purely on which years the bad returns arrive. Holding two to three years of planned spending outside the stock market blunts it.
• Give healthcare its own bucket: If you’re still working and have access to a health savings account, fund it and, if you can, avoid spending it. HSA money goes in pretax, grows untaxed, and comes out untaxed for medical costs. No other account in the U.S. tax code offers all three. A couple who maxes an HSA through their 50s can reach 65 with six figures earmarked for the category that inflates fastest.
• Confront long-term care before it confronts you: None of the spending figures in this article include it, and roughly 7 in 10 people turning 65 will need some form of care during their lifetime. The choices are essentially three: insure the risk, self-fund it with a dedicated reserve, or plan on family and Medicaid. Any of these can be defensible. Choosing none of them by default is the only indefensible option.
• Mind the tax sequencing: Which accounts you draw from, and in what order, can swing your lifetime tax bill by six figures and determine whether Medicare surcharges eat into your benefits. Roth conversions in the low-income years between retirement and required distributions are one of the most valuable and most frequently missed windows in personal finance.

Every one of these decisions interacts with the others, and the right answers depend on your assets, health, family situation, and state tax code. That’s where a qualified financial advisor helps. A good one won’t just hand you a projected monthly budget. They’ll pressure-test your spending assumptions against the 65 vs 75 curve, structure your withdrawal order, and build the late-life contingencies most self-directed plans quietly skip. If your retirement is inside a 10-year window, the conversation is worth having now, while the highest-leverage moves are still on the table. Consider exploring our financial advisor directory to find vetted professionals who can make the calculations easier for you.

Frequently asked questions about monthly expenses in retirement

1. What is the biggest expense for retirees?

Housing is the biggest expense for retirees, at roughly $1,849 a month and about 36% of the average retiree budget. It holds the top spot even for those who own their home outright, because property taxes, homeowners insurance, utilities, maintenance, and repairs continue regardless of mortgage status. Transportation comes in second at about $795 a month, which surprises many people, since it outranks both food and healthcare in the typical retiree budget.

2. How much should I budget for healthcare in retirement?

How much you should budget for healthcare in retirement depends on whether you’re looking at monthly costs or the lifetime picture, and you need both. The average 65-plus household spends about $650 a month on healthcare today. Over a full retirement, however, Fidelity estimates a single 65-year-old will spend $172,500 on medical costs, and a couple around $345,000. Neither figure includes long-term care, which roughly 7 in 10 people turning 65 will eventually need, so that risk deserves its own separate plan.

3. Why do people spend less at 75 than at 65?

People spend less at 75 than at 65 mainly because discretionary spending falls as lifestyles change. Travel winds down, driving decreases, dining out becomes less frequent, and clothing purchases drop sharply. Healthcare is the one exception. It typically rises as a share of the budget with age, which is why total spending can level off or even curl back upward late in life if serious medical or care needs arise.