The average American retiree spent approximately $59,616 in 2024, with housing consuming nearly 37% of that total — roughly $1 of every $3 spent — according to the most recent data from the Federal Reserve's Consumer Expenditure Survey (CES).

Housing Dominates Retirement Spending

A typical retiree devoted $22,079 annually to shelter-related costs in 2024, making it by far the largest single line item in the retirement budget. For context, the average annual expenditure of $59,616 translates to approximately $5,000 per month.

The burden of housing costs is compounded by the fact that many retirees still carry mortgage debt. According to a 2023 report by the Joint Center for Housing Studies of Harvard University, nearly 41% of Americans between the ages of 65 and 79 had a mortgage on their primary home. Elevated home prices and higher interest rates in recent years have made downsizing and refinancing more challenging for retirees seeking to reduce monthly shelter costs.

Other Major Expense Categories

After housing, the three largest spending categories for retirees in 2024 were:

• Transportation: $9,244
• Food: $8,021
• Healthcare: $7,735

Combined, these three categories accounted for 42% of the typical retirement budget. Healthcare spending, while averaging $7,735 across retirees of all ages in the CES data, generally increases as retirees move through their later years, with older retirees typically facing higher out-of-pocket medical and prescription costs.

Planning Considerations

The data underscores that annual spending levels directly determine how much retirees need to have saved. Using the widely referenced 4% withdrawal guideline, a household targeting roughly $60,000 in annual withdrawals from savings would need a portfolio of approximately $1.5 million before accounting for other income sources. In practice, most retirees supplement savings with Social Security benefits, which averaged approximately $1,900 per month for retired workers in early 2024, though benefit amounts vary significantly based on lifetime earnings and claiming age.

Housing represents the most significant opportunity for cost reduction, whether through refinancing a mortgage at a more favorable interest rate or reducing home-related expenses such as insurance premiums.

Transportation costs also represent a meaningful portion of retiree budgets. According to Forbes, the average cost of full car insurance in 2026 is $2,434.

Long-term care represents another potential financial risk. Long-term care insurance covers in-home assistance, nursing homes, and assisted living facilities. According to the U.S. Department of Health and Human Services, approximately 70% of people turning age 65 today will need some form of long-term care during their remaining lifetime. Without adequate planning, these costs can significantly deplete retirement savings, and in many cases, the financial burden of paying for care falls on family members.

Sources

Federal Reserve Economic Data (CES); Harvard Joint Center for Housing Studies; Forbes; U.S. Department of Health and Human Services; Social Security Administration