How much do you need to save? Understanding the average cost of retirement

Get a realistic retirement budget by finding out what things can cost beyond just the necessities.

Creating a realistic retirement budget means planning beyond your basic living needs to incorporate the things that will enrich your life and the lives of those around you.

You might see yourself living healthier, picking up a new hobby or traveling more. Maybe you'll find more opportunities to give back to your community, volunteer for your favorite causes or contribute more to a grandchild's college fund. No matter what your retirement goals are, you'll want to account for their costs when creating your retirement savings plan.

The average retired household has about $4,000 in retirement expenses per month, or $48,106 per year.1 That amount can fluctuate depending on which spending categories are most important to you.

1. Healthcare

With retirements lasting longer, staying healthy could have a big impact on how much you enjoy yours—and how much it costs. Retirees typically face higher healthcare costs as they age, and Medicare doesn't cover everything.

$662,156. The amount a healthy 65-year-old couple in 2020 could expect to spend throughout their retirement on healthcare expenses.2

2. Travel

Retirement may provide more than enough time to visit all the places on your bucket list, but it's up to your savings to provide the money you'll need for your journeys.

$6,600. Average amount per year Baby Boomers spend on vacations.3

3. Self-improvement

Whether you attend workshops, self-learn or even go back to school, you may want to budget for gaining new knowledge or developing existing skills. This cost can increase quickly if you want to go back to school to take a class or two.

$322. Average annual amount spent on education by households led by someone 65 years or older.1

4. Giving back

A strong desire among recent retirees to help others is making volunteerism after age 65 an increasing trend. Another good sign—charitable giving is staying the same after retirement, even as other spending decreases.

$2,732. Average cash contributions per year by households led by someone age 65 or older.1

5. Entertainment & leisure

Even when you're retired, you'll still need to unwind. Maybe it's dancing lessons, tennis, or an annual membership to a local botanical garden.

$2,282. Average annual amount spent on entertainment by households led by someone age 65 or older.1

6. Around the house

Even if your mortgage is paid off, keeping a comfortable home may be a large part of your retirement budget if you increase spending on yard or home maintenance that you no longer want to take on yourself. Don't forget about property taxes and insurance, either.

$16,790. Average annual amount spent on home ownership, excluding mortgage principal, interest and charges, by households led by someone age 65 or older.1

7. Daily needs

While you may no longer need to worry about your work commute, lunches or clothes for the office, you'll still want to treat yourself, whether that means dinner out or a new pair of shoes and transportation for your next adventure.

$14,001. Total average annual amount spent on food, apparel and transportation by households led by someone age 65 or older.1

Use our retirement checkup toolOpens in a new window to assess where you are on the path to reaching your financial goals and learn how to help get back on track if you're behind. Your future self will thank you—if they're not too busy having fun.

1 Bureau of Labor Statistics Consumer Expenditure Surveys, 3Q 2019 through 2Q 2020. Published April 2021.

2 2021 Retirement Healthcare Costs Data Report, HealthView Services. Published December 2020.

3 "The Average Cost of a Vacation: 2021 Trends Report," Million Mile Secrets, April 27, 2021.