Retirement Spending: Trends and Unexpected Expenses

What Do Retirees Spend Money On

Retirement marks a significant shift in spending habits, influenced by changes in income and lifestyle. Understanding how retirees allocate their funds is crucial for planning and maintaining financial stability during retirement years.

Statistics and Trends in Retirement Spending

  1. Average Savings and Income:
    • In 2022, the average American retiree had $170,726 saved for retirement, a decrease from $191,659 at the start of 2022​​.
    • The average income for those aged 65 and older was $55,335 in 2021​​.
  2. General Spending Patterns:
    • Retirees spent an average of $52,141 annually in 2021, roughly 80% of their annual preretirement income​​.
    • 48% of retirees spent under $2,000 monthly, 33% spent between $2,000 and $3,999, and 18% spent over $3,999 in 2022​​.
  3. Housing Costs:
    • Housing expenses for retirees averaged $18,872 in 2021, comprising costs like rent, household operations, and furnishings​​.
  4. Healthcare Expenditure:
    • On average, 5% of monthly spending went toward out-of-pocket medical costs and 8% toward health insurance​​.
    • Average spending on health care was $7,030 in 2021​​.
  5. Transportation Costs:
    • Transportation expenses averaged $7,160 in 2021, including vehicle purchases and public transportation​​.
  6. Food Expenses:
    • Approximately 25% of monthly spending was directed towards food expenses, with the majority being on food at home​​.
  7. Debt among Retirees:
    • A notable 96% of retirees had some form of debt in 2022, predominantly credit card and mortgage debts​​.
  8. Other Expenses:
    • Personal insurance and pensions: $2,850 on average in 2021​​.
    • Entertainment: $2,889 on average in 2021, forming 8% of monthly spending in 2022​​.
    • Apparel and services: $986 on average in 2021, accounting for 7% of monthly spending in 2022​​.
Statistics and Trends in Retirement Spending

Unexpected Retirement Expenses

Retirement often brings unforeseen expenses, which can strain budgets if not anticipated. Some of these include:

  1. Long-Term Care Costs: Long-term care, not always covered by insurance, can be a significant unforeseen expense.
  2. Home Maintenance: As property ages, maintenance and repair costs can escalate unexpectedly.
  3. Healthcare Increases: Healthcare costs, especially out-of-pocket expenses, can rise unexpectedly, influenced by changes in health and insurance coverage.
  4. Inflation Impact: The cost of living tends to increase over time due to inflation, affecting the purchasing power of retirement savings.
  5. Supporting Family Members: Financial support for children or grandchildren can emerge as an unplanned expense.
  6. Leisure and Travel: Increased leisure time often leads to higher spending on travel and hobbies, which may not have been part of the initial retirement budget.


Retirement spending is a complex mix of necessary expenses, lifestyle choices, and unexpected costs. Adequate planning and budgeting, considering both typical and unforeseen expenses, are essential for a financially secure retirement. Being aware of these trends and preparing for potential surprises can help ensure a more comfortable and stress-free retirement period.

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