Retirement Planning: How Much the Average Person Under 70 Spends Monthly

As people move toward retirement age, having a realistic budget is imperative to cover monthly expenses. While everyone has a different financial situation and spending habits, understanding how much the average retiree spends a month allows for smarter planning and a more financially comfortable and stress-free retirement. The average person 65 years and older spent $4,818 a month in 2022, according to the Bureau of Labor Statistics, and retirees should plan on spending the majority of their monthly income on expenses. “Retirees can expect to spend 50% to 80% of their current income in retirement,” Jack B. Murad, CPA, MBT, said. To help those nearing retirement make informed decisions, GOBankingRates consulted experts who explained how the average retiree spends their monthly income and provided tips on stretching limited funds. Wealthy people know the best money secrets. Learn how to copy them.

Housing, Food and Transportation

It’s no surprise that housing is one of the biggest expenses for retirees. “On average, retirees at 67 spend around $3,800 monthly,” Shawn Plummer, CEO of The Annuity Expert, said. “This includes housing, healthcare, food and transportation. Housing is typically the largest expense, often consuming 30% to 35% of the budget. Utility costs, property taxes and maintenance fees add to this expense,” he explained. A tip for retirees trying to cut costs is to downsize to help manage housing costs, Plummer said. Read Next: 9 Moves for Retirement Planning To Make Now If You’re Worried About the Economy

Healthcare

Another big monthly expense is healthcare. “Healthcare is crucial, often costing $600 to $700 per month,” per Plummer. “This includes premiums, medications and out-of-pocket expenses. Budgeting for healthcare is essential to avoid financial strain. Long-term care insurance and Medicare supplement plans are also wise considerations.”

Travel

Retirement should be about enjoying the rewards of your hard work and seeking new adventures like traveling. “When managing cash flows for clients under the age of 70, something that is not focused on is that I have yet to see a single client spend less on experiences and travel than they had previously,” Matthew Murawski, financial planner with Goodstein Wealth Management, LLC, said. “What happens is when people start to retire, they are flooded with all the time in the world to do whatever they want for the first time since they were kids, and the average spending on things like international travel, travel to grandkids, theatre tickets, cruises, etc. ranges from $1,000 to $3,000 per month,” he added.

Grandkids’ College Fund

Another area retirees spend their money on is their grandkids’ college. “In my practice, the average person under 70, in addition to all the known expenses, contributes anywhere from $150 to $500 a month to their grandkids’ college savings plans,” Murawski said. “Depending on the state of residence, this offers tax benefits in the year of the contribution as well.”

How To Maximize Retirement Savings

Every retiree wants financial security, and while Social Security is a key component of retirement income, “it’s essential to know the exact benefit amount and the best time to start taking it,” Plummer advised. He also suggested considering delaying Social Security benefits until age 70. “This maximizes your monthly benefit, providing more financial security. Benefits can cover a significant portion of monthly expenses, but relying solely on them isn’t advisable,” he explained. “Supplementing Social Security with pensions, annuities or investment income ensures a more secure retirement.” Another way to make the most of your monthly retirement income is to consolidate or pay off debt before reaching your golden years. “Reducing or eliminating high-interest debt can free up more monthly income for essential expenses,” said Plummer. “Entering retirement with minimal debt ensures better financial stability and peace of mind.”