Retirement Planning: How Much the Average Person 75 and Older Spends Monthly
Written by
Martin Dasko
Edited by
Ashleigh Ray
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As people approach their 70s, they start to adjust to retirement living as they’ve likely exited the workforce and are enjoying their golden years. By the time you reach 75, you’re likely settled into a retirement lifestyle that works for you.
While everyone will design their own ideal lifestyle in their golden years, it’s helpful to review how much the typical retiree spends monthly on the major expenses so that you can plan accordingly. How much does the average person 75 and older spend monthly?
Average Retirement Spending
According to the Bureau of Labor Statistics (BLS), the average income of someone 75 and older in 2022 was $49,392 before taxes and $47,928 after taxes.
The average expenses for those 75 and over were $53,481, or $4,456.75 per month, much lower than the $60,844 those between 65 and 74 had in annual expenses.
Typical Expenses in Retirement
As you plan for your retirement expenses, it helps to break down your costs based on the main categories so that you can make changes to ensure that you can have an enjoyable quality of living after working your entire life.
Housing
Housing costs will be your largest expense in retirement unless you pay off your mortgage. The BLS report found that people 75 and older spend $19,317 yearly on housing, representing 36.1% of their total annual expenses. While $1,609.75 monthly may seem steep, it’s likely that property taxes, higher interest rates and other factors have raised housing costs.
You can cut back on your housing costs by considering one of the following options:
- Downsizing to a smaller home to pay off your mortgage.
- Move to a destination with lower home prices since you have the freedom to move now that you’re not attached to your job.
Healthcare
Healthcare expenses for those 75 and over cost Americans an average of $7,708 yearly, or 14.4% of their overall expenses.
Healthcare expenses will likely go up as people age compared to when they were working. This is due to the higher likelihood of illness, medical procedure or the costs associated with long-term care.
One of the best ways to limit this expense is to spend some time and money upfront on preventative measures like exercising, eating better and taking care of your body in any way you can.
Transportation
Your transportation costs will likely drop as you get older since you won’t have to commute to work. The average American spends $6,209 on transportation, or 11.6% of their annual expenditures.
The $517 monthly expense can likely factor in parking, fuel and other costs associated with getting around. You can cut back on this area by moving to a destination where you don’t have to drive as often.
Food
Food expenses account for an average of $6,020 yearly, or 11.3% of annual expenses. Spending around $500 monthly seems normal, considering you may dine out more often as you’ll likely have friends who want to meet.
You can reduce costs in this area by meal planning, couponing to find better deals or limiting how often you dine out. If dining out is a major part of your retirement lifestyle, then you could look into ways to save on the other categories.
Utilities
Utilities get a little more expensive as you get older since you’re home often and may have more free time. The average American spends $4,043 annually on utilities or 7.6% of their total annual expenses.
You can limit your costs here by adjusting your thermostat and limiting your indoor consumption when possible.
How Much Should You Plan To Spend in Retirement?
“Inflation and supply chain snarls have increased food prices significantly,” said Stephen Kates, certified financial planner (CFP) and the principal financial analyst for Annuity.org. “For similar reasons, housing values have risen, which is generally beneficial but causes property taxes to increase as well.”
Your retirement expenses will change as you get older based on life circumstances since you may have children who leave home, you may move away, or you could switch up your overall lifestyle.
Kates added the following insights on retirement spending over 75:
“As retirees age, they tend to slow down their travel, which can trim costs, but rising healthcare costs due to advanced age or other factors may offset this. Retirees should focus on the areas that they have the most control over, one of which is maintaining good health. Even if it means buying more expensive but better-quality food, better health will expose them to less costly medical procedures.”
Closing Thoughts
As you adjust to retirement living, it’s helpful to know how much the average person will spend on various expenses. While your expenses and lifestyle could vary from the average person, it helps to be aware of common costs. It’s crucial that you run your own calculations to determine how much money you’ll need to live your desired lifestyle in your 70s and going forward.
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