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 $4,100 in retirement expenses per month, or $49,257 per year.1 That amount can fluctuate depending on which spending categories are most important to you.
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.
$16,888. Average annual amount a healthy couple will pay for healthcare in retirement, including Medicare and supplemental insurance premiums and out-of-pocket costs2
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.
$11,077. Average annual amount spent by retirees on vacations3
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.
$350. Annual amount a retired household spends on their own education4
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.5
$2,429. Average cash contributions per year for retired households, which includes charity and giving to family members4
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.
$2,365. Average annual cost for entertainment for retirees4
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.
$12,552. Typical annual homeownership costs not including a mortgage payment6
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.
$14,058. Total average annual cost of transportation, food and clothing for retirement-age people4
Use our retirement checkup tool 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 Survey, 3Q 2017–2Q 2018, published April 26, 2019
2 2018 Retirement Health Care Costs Data Report, HealthView Services
3 “Almost Half of Retirees Spend More Than Expected on 2 Common Expenses,” Motley Fool, Feb. 2, 2018
4 “How Spending Changes in Retirement,” SmartAsset, 2018
5 “Charitable giving doesn’t slow after retirement, study finds,” CNBC.com, July 26, 2018
6 “Here’s Why It Costs $1,204 a Month to Maintain the Average Home,” GoBankingRates, 2017