How much does it cost to live in retirement? Not much less than I did before the retirement.
American households led by someone age 65 or older spend an average of $47,579 annually. That’s according to the latest federal data on consumer spending, for 2020.
By comparison, the average across all households is $61,334.
So where does all that money go every golden year? The biggest expenses for older families are the same as for younger Americans.
More than a third of older family spending is related to housing. This translates to an average of $17,435 per year, compared to $21,409 for the average American household.
This spending includes rent and mortgage costs as well as the homeowner’s hidden costs such as property taxes, insurance, maintenance, and repairs. Does not include utilities – which are detailed in Section 5.
2. Health care
Now, this is an example of calculating that Increases in retirement. Older families spend an average of $6,668 on health care annually — compared to the average $5,177 spent by all families.
The bulk of consumer health care spending – for both older families and the average household at all ages – is under insurance. The rest is on medical services, medical supplies and medicines.
For a more detailed breakdown, check out Here’s How Much Older People Actually Spend on Health Care.
Transportation expenses may shrink when you retire, but that doesn’t mean all transportation costs will go down.
Older families spent an average of $6,221 on transportation costs such as vehicles, gas, and insurance in 2020.
That number for last year is lower than usual as well, presumably because people of all ages are driving less cars amid the COVID-19 pandemic. (The average was $7,492 in 2019 and $7,270 in 2018).
Across all households, average transportation spending was $9,826 in 2020.
Older families spend an average of $5,698 per year on food, including the food they eat at home ($4,204) and take out $1,494.
This is less than the average of $7,316 in total food expenditure by all households overall.
5. Public facilities and services
Older families spend an average of $3,783 annually on utilities such as natural gas and electricity, and services such as telephone and water.
By comparison, the average spending across all households is $4,158.
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click on links in our Stories.