Where Does Your Money Go in Retirement? The Average Spending Breakdown

How Does Retirement Spending Compare to Working Years?

Bureau of Labor Statistics data for households 65+:

1. Housing: 33% (~$18,000/year) — drops dramatically if mortgage is paid off 2. Transportation: 15% (~$8,000) — typically decreases (no commute) 3. Healthcare: 13% (~$7,000) — increases every year, fastest-growing category 4. Food: 12% (~$6,500) — slightly lower than working years (less eating out for some) 5. Insurance/Pensions: 8% (~$4,500) — Medicare premiums, supplemental insurance 6. Entertainment: 5% (~$2,800) — varies widely by lifestyle 7. Other (clothing, gifts, personal care, etc.): 14% (~$7,500)

Total: approximately $54,000/year for the average 65+ household. Your number will differ — the analysis calculates it from YOUR inputs, not averages.

Which Categories Change the Most?

Biggest decreases: Work-related costs (commuting, professional clothes, lunches out) virtually disappear. Savings/retirement contributions stop. FICA taxes end.

Biggest increases: Healthcare (+5.5% annual inflation), travel (often high in early retirement), home maintenance (older homes need more), and gifts/financial support to adult children or grandchildren.

The analysis engine uses your specific spending inputs — not national averages. The spending sensitivity table then shows how adjusting total spending by 10-25% affects your success rate.

Want to Build Your Retirement Budget?

The analysis at myaifinancialplan.com helps you build a personalized retirement budget and shows how each spending category affects your long-term success rate. Start free at myaifinancialplan.com.