Controlling Your Finances And Average Retiree Expenses

Controlling your finances in retirement

Things You Can Do To Help Control Your Finances In Retirement

  1. Create a budget
  2. Track your spending
  3. Automate your savings
  4. Create an emergency fund
  5. Reduce your debt
  6. Review your insurance
  7. Know your net worth

Average Retirement Expenses

Notably, spending in retirement typically declines compared to spending by those who continue working. People are always curious, and I get asked a lot by clients what other retirees expenses look like. It makes sense – they want to know where they stand compared to others of similar age and circumstance. In my experience of sitting down with retirees and reviewing their finances over the last 20 years – along with several surveys and some Google searches – on average, households run by those at least 65 years of age have the following monthly expenses:

  • Housing: $1,300 to $1350 Housing remains the largest expense for all age groups. I prefer that this expense is nonexistent for retirees – meaning that the house is paid off BEFORE you retire. Keep in mind some of this cost never goes away – like property taxes, insurance, maintenance and repairs
  • Transportation: $500 to $600 The average transportation expense for seniors is typically one-third less than for other age groups. Makes sense – not getting up and going back and forth to work every day. This includes gas, maintenance, insurance and repairs
  • Healthcare: $500 Insurance premiums typically continue to rise as you age, but Medicare helps to cover some costs. This expense does not account for the $265,000 estimate that most couples over the age of 65 are projected to spend in additional health care costs like long-term care.
  • Food: $475 to $500 Retirees spend nearly 20 percent less on food than average households.
  • Personal insurance: $250 life, disability or social security premiums if a spouse is still working
  • Cash contributions: $200 or close to $2400 per year. I’d prefer to see more seniors donate their time versus their money unless they are well off. Odds are they are going need it – especially if they have a longer life expectancy.
  • Entertainment: About $200. Sitting around gets boring and it costs money to do things. Seniors typically spend approximately $50 less on “fun” than other age groups.

In total, the average over age 65 household spends roughly $3800 per month or $45,600 per year according to the latest Bureau of Labor Statistics data from their latest study completed in 2016. (Source: Nerdwallet)