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Predicting what you'll spend in retirement is a key step in retirement planning, but it can be hard to get a handle on it. If you want to make a quick estimate of your retirement costs, consider the most recent data from the Bureau of Labor Statistics (BLS). The BLS found, on average, American households led by people age 65 and older spend $5,119 per month. Here's what that could mean for your retirement plans.
What Is the Average Retirement Spending?
BLS data shows that, in 2024, the average household headed by a person age 65 or older spent $61,432 per year—or $5,119 monthly—on housing, food, utilities, household operations, clothing, transportation, health care, entertainment and miscellaneous expenses.
Households led by older retirees spent less than their younger counterparts: $5,446 per month for households headed by 65- to 74-year-olds versus $4,652 per month for households headed by people 75 and older.
Your Spending Will Differ
BLS data can provide a useful thumbnail, but your own spending will almost certainly be different. Why? So much depends on the cost of living where you are, whether your home is paid for, what your plans might be for travel and the planned and unplanned cost of health care—to name just a few variables. Living with a spouse, partner or roommates may also affect your household income and expenses. Using your current budget to project expenses in retirement is a much more accurate way to estimate what you will spend in retirement personally.
Meanwhile, average spending data offer some insight into the costs you might encounter when you retire, and what it might take to cover those expenses.
How Much Should You Have Saved for Retirement?
Ideally, your retirement savings should cover your expenses from retirement to the end of your life. Sounds simple, but there are a few unknowns that can make this calculation more difficult.
- Unexpected expenses: Beyond your regular expenses, how many dental implants will you need, for example? What if your home is damaged in a natural disaster?
- Lifespan: Most of us simply don't know how long we'll live in retirement.
- Interest and investment earnings: While you'll presumably earn interest and/or investment gains during retirement, this income can fluctuate.
Retirement planners use a variety of tools to estimate how much savings you'll need to retire. The "4% Rule" says you can safely withdraw 4% of your retirement savings during the first year of retirement and continue withdrawing that amount (adjusted each year for inflation) for 30 years without running out of money.
While the 4% rule isn't foolproof, it can be helpful for estimating how much you would need to cover average spending in retirement. If you need to pay expenses entirely from retirement savings (without Social Security or other pension benefits), you'll need an average of $61,432 per year to start, or 4% of $1,535,800.
Should You Count on Social Security in Retirement?
The average monthly Social Security check for retired workers in June 2026 was roughly $1,937, but your monthly benefit amount is likely to be different. The Social Security website can estimate your monthly benefit at different retirement ages if you visit the Social Security website and sign up for an account.
Meanwhile, a $1,937 check every month doesn't cover average spending of $5,119, but it does get you nearly 40% of the way there. Using average data, your retirement savings would have to cover an additional $3,182 monthly, or $38,184 per year, to make ends meet. Following the 4% rule, you would need roughly $954,600 in retirement savings to sustain a $38,184 annual withdrawal for 30 years, adjusting for inflation every year.
Tips for Cutting Expenses in Retirement
On average, retirees spend the most on housing, transportation and food each month. Although there are many ways to cut your expenses in retirement, you may get the most bang for your buck by starting with these three spending areas.
1. Cut Your Housing Expenses
Housing is the largest retirement expense BLS data tracks, averaging $1,849 per month. Whether you currently rent or own, look for ways to reduce your housing costs, including paying off your mortgage early, getting a smaller place, taking in roommates, searching for cheaper home insurance or moving in with friends or family.
2. Sell Your Car—or Your Second Car
Maintaining a car means car payments, insurance, fuel, repairs, maintenance, parking and more. If you can do without your car (or second car), now may be a good time to sell. You may also benefit from moving to a place where walking and public transportation make a car unnecessary.
3. Plan for Health Care Expenses
An average retired couple age 65 in 2022 may need roughly $345,000 in after-tax savings to cover health care expenses in retirement, according to the Fidelity Retiree Health Care Cost Estimate. If you aren't retired yet, consider using a tax-advantaged health savings account to build up reserves. You can get free counseling from your state's State Health Insurance Assistance Program (SHIP) to make sure you're choosing the Medicare plan that makes the most financial sense.
The Bottom Line
To get a read on what you might spend when you retire—and how you'll fund that spending—start by taking stock of your expected costs based on your current budget. A financial planner who specializes in retirement planning can help you puzzle out how your retirement savings, pensions, Social Security, investments and other possible sources of income might provide for you in retirement.
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