How Much the Average Middle-Class Retiree Spends Monthly at Age 65
Written by
Daisy Carrington
Edited by
Rebekah Evans
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The early retirement years can be both thrilling and anxiety-producing, as retirees balance enjoying their newfound freedom with a reduction in earnings. To plan, it’s important for new retirees to anticipate spending and budget accordingly.
According to the U.S. Bureau of Labor Statistics’ (BLS) 2024 Consumer Expenditure Report, retirees ages 65 to 74 spent an average of $65,149 in 2023 — about $5,429 per month. While that number provides a useful baseline, financial experts warn it doesn’t fully capture the realities for middle-class retirees in the prime of their retirement.
Top Expenses for Middle-Class Retirees
The BLS data shows that the bulk of retiree spending goes to three major categories:
- Housing: costing retirees $1,150 on average for homeowners
- Transportation: $908 a month
- Food: $714 a month
However, there is a wildcard that can significantly affect financial planning, which middle-class retirees often overlook and that is healthcare.
“Healthcare costs can really skew the numbers,” said Peter Dunn, financial expert, CEO of financial wellness employee benefit company Your Money Line and host of “The Pete the Planner Show.” “For some people, healthcare is minimal, while for others, it can feel like taking on a new mortgage payment.”
While the BLS puts healthcare costs at $662 per month, Dunn said some retirees can spend between $1,500 and $1,800 per month. For middle-class households, this can significantly change spending patterns.
Steven Conners, financial advisor with Conners Wealth Management, pointed out some ways that middle-class retirees can cut some of those healthcare costs. “Medicare Advantage can be a smart way to reduce costs, if you’re comfortable with the physicians in the plan,” he said. “It’s basically all-encompassing — prescription drugs are included, so you don’t have to go out and buy Part D separately.”
Spending in Early Retirement
Dunn noted that people at the beginning of their retirement journey are likely to spend more than those who have been retired for a decade or more. He pointed to a common framework in retirement planning known as the “go-go, slow-go, no-go” years. He said spending often rises in the early “go-go” years, when retirees are more likely to travel, dine out and engage in hobbies while health and mobility allow. That spending tapers off in the middle “slow-go” years once they’ve settled into routines and are more likely to limit travel or large purchases. In the later “no-go” years, discretionary spending drops as healthcare costs rise. So while the BLS puts monthly entertainment costs at $287 and travel costs at $908, those numbers are likely to be higher for 65-year-olds than 75-year-olds.
Conners also emphasized the importance of location and lifestyle choices in the early years of retirement.
“Where you live matters,” he said. “If you’re in a coastal city, you’re paying a premium. Many of my clients downsize over time or even relocate to less expensive areas. That alone can make a big difference for middle-income retirees.”
Planning Ahead
For middle-class retirees, the key takeaway is to expect fluctuations. Housing and transportation can decrease over time, but healthcare may take their place as the dominant expense. The average of $5,429 per month is a useful benchmark, but individual circumstances — mortgage status, health and lifestyle choices — can shift the numbers substantially.
Beyond the big categories, Conners encouraged retirees to regularly review everyday expenses.
“Auto insurance has spiked in recent years, especially in states like Arizona,” he said. “By shopping around, people can often save 20% to 30%.”
He also recommended reviewing habits like dining out, cable subscriptions and insurance premiums every six to 12 months. “Even small cuts add up and over time they can give retirees more breathing room in their budgets.”
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