How Much the Average Middle Class Retiree Spends Monthly at Age 85

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As people build up for retirement, one of the biggest questions is how much money they need in their nest eggs. Looking at how middle-class retirees spend money right now can give people an idea of how much they need to save.

The average middle-class retiree’s spending may change as they get older. On one hand, 85-year-old middle-class retirees are less likely to go on international trips. They save a lot on travel compared to younger retirees, but health issues may require an assistant and involve medical bills.

Eighty-five-year-old retirees also have their homes paid off at this point, so they only have to contend with property taxes and maintenance fees. Some of them may have also downsized, as a family home that was suitable for four children won’t make as much sense for an empty-nest couple.

The Annual Spending Of 85-Year-Old Middle-Class Retirees

Data on middle-class retiree spending is sparse, especially if you break it down to specific ages. The 2014 Consumer Expenditure Survey is one of the most comprehensive studies in this line of research, with 127 million people surveyed. There is no category for 85-year-olds, but there is a 75-plus category that we will use. After presenting the numbers, we will adjust them for inflation.

Annual expenditures for people who are 75 years or older came to $36,673 in 2014 dollars. That’s a 25% drop from the average annual expenses for people who are 65 to 74 years old. The $36,673 figure represents a steep 35% drop in expenses from retirees who are 55 to 64 years old.

Inflation has changed these numbers for modern retirement planners. Annual expenses of $36,673 in 2014 dollars now come to $50,647 per year, according to the U.S. Bureau of Labor Statistics CPI Inflation Calculator. That comes to $4,220.58 per month.

How Spending Changes

Most middle-class retirees gradually spend less money on various categories. Food, clothing, transportation, and entertainment are some of the costs that go down over time. Housing and healthcare costs, as a percentage of total annual expenditures, go up for 85-year-old retirees. 

Housing costs still go down for older retirees, but since other expenses go down at a faster rate, housing remains a higher percentage of an 85-year-old middle-class retiree’s expenses.

Healthcare costs are the only expense that increases over time. The average 85-year-old middle-class retiree spends an inflation-adjusted $7,883 per year on healthcare. 

How Much Do You Need?

An 85-year-old middle-class retiree spends approximately $4,220.58 per month, which comes to $50,648.16 per year. At this point, the person has likely been retired for several years and has burned through some of their nest egg. 

Using the 4% withdrawal rule, that comes to a $1.27 million portfolio. However, this rule doesn’t carry as much merit for an 85-year-old retiree who doesn’t have as many years left and collects some Social Security. It’s better to use the 4% withdrawal rule based on how much you want to spend in your 60s and early 70s, and retire within that age range if you want to get out of the workforce.

The average 85-year-old retiree receives $2,202.04 in monthly Social Security benefits. That cuts the average monthly expenditure gap down to $2,018.54 per month, or $24,222.48 per year. 

It’s not good to rely on Social Security in your retirement planning if you are still in the workforce. Having your own nest egg that covers everything is better than needing Social Security. However, 85-year-old middle-class retirees don’t spend their money on as many things, which gives their Social Security checks more mileage. 

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