How Much the Average Middle Class Retiree Spends Monthly at Age 68

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Even if you’re considered middle class in retirement, making ends meet isn’t easy. 

Overall, 32% of retirees say their standard of living is lower in retirement than it was during their working years, while only 10% say it’s higher, according to an Employee Benefit Research Institute (EBRI) survey. Part of that could have to do with tight budgets.

Forty-six percent think they didn’t save enough for retirement, and rising costs are likely making that harder; in 2020, just 17% said their current spending is more than they can afford, but that went up to 27% in 2022, the most recent survey year. 

However, even if you find yourself early on in retirement with a relatively tight budget, such as at age 68, there are ways you can potentially ease that pressure. 

Spending Patterns at Age 68

While there’s limited data on middle-class retiree spending specifically at age 68, we can approximate these amounts based on data across different age ranges from the Consumer Expenditure Surveys (CE) program from the U.S. Bureau of Labor Statistics.

Note that the CE surveys are based on spending of a combined consumer unit — often a household unless living with roommates, for example — and the ages reflect the person first mentioned by the survey respondent regarding who rents or owns their home. For those ages 65 to 74, the survey includes an average consumer unit size of 1.9 people, so the figures generally reflect spending for a couple.

For those ages 55 to 64, with an average consumer unit size of 2.2, average annual spending totals $83,379. Among the 65 to 74 cohort, average spending drops to $65,149. 

While part of the drop may have to do with the slightly smaller household size — 2.2 versus 1.9 — for simplicity’s sake, we can assume that these averages roughly equate to spending for a couple. And if we assume average spending roughly maps to the midpoints of these ranges, that means average annual spending for a couple at age 60 equals $83,379, dropping down by 21.9% to $65,149 by age 70.

From there, we can approximate spending at age 68 based on a compounding decline of 2.44% per year, meaning spending for a couple at 68 is roughly $68,466. 

On a monthly basis, this equals approximately $5,700 in spending. The exact rate of spending decline does depend on household size, but this is likely in the ballpark of what a 68-year-old, average middle-class retired couple spends per month.

“$5,700 a month looks okay on paper, but in reality, it’s tight, especially for a retired couple. It’s not that you can’t live on that amount, but it usually means your choices are limited,” said James Comblo, CEO of FSC Wealth Advisors. “Things like travel become a treat, home projects get delayed and gifting to kids or grandkids happens less often.”

Typically, housing takes the largest chunk, with those ages 65 to 74 spending around $1,851 per month on all housing-related costs, including utilities and maintenance. 

Transportation is another big expense, averaging around $908 per month for those ages 65 to 74 (still reflecting a 1.9-person household). This includes car payments for some, as well as other common expenses like gas and insurance.

Healthcare costs can add up too, with the 65-to-74 cohort spending around $661 per month. This might inch up as you age, but on average, those over 75 only spend around $17 more per month. That said, the average consumer unit shrinks from 1.9 to 1.6 for those 75 and older, so per-person healthcare spending likely accelerates a bit more.

Making the Most of Your Retirement Spending

While these averages might give you a general frame of reference, the reality is that everyone’s retirement finances are highly context-dependent.

“The Bureau of Labor Statistics isn’t measuring your unique situation. Living in the Midwest with no mortgage has a very different feel when compared to someone paying property taxes in New York,” said Comblo.

Instead of getting too caught up in seeing how you compare to others, think about what you want your own retirement to look like and plan accordingly.

“What I see most often isn’t overspending, it’s underestimating what you’ll actually want to do in retirement. Covering the bills is important, but you want enough room to live life without feeling anxious every time the market dips or a roof leaks,” said Comblo.

That’s why it’s important to focus on retirement income planning and tax strategy, instead of just looking at the size of your nest egg, he added.

“The biggest stressor I see isn’t that people are spending too much, it’s that they don’t know what’s safe to spend,” said Comblo.

To combat this, he uses a three-bucket strategy with clients: a “now” bucket covering two years of expenses in cash, a “soon” bucket covering two to 10 years that’s more conservatively managed to keep up with inflation but able to replenish your cash, and a “later” bucket that’s more for long-term needs and passing money on as inheritance, which means this portion can typically be invested in stocks to fight inflation, he explained. 

Moreover, small changes can free up extra cash — like consolidating streaming services or insurance plans, or putting idle checking account cash to better use. But an even bigger way to boost net income could be tax planning, said Comblo.

“Between Roth conversions and tax-efficient withdrawal strategies, many retirees can stretch their savings just by keeping more of their money instead of handing it to the IRS,” he said. 

Ultimately, having a stronger financial strategy can mean that a middle-class retirement is more comfortable, both psychologically and financially.

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