5 Biggest Expenses for Retiree Households – The 401(k) Specialist


$50,220. That’s how much the average retiree household spends per year, according to the latest Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics (BLS), released on Sept. 9, 2020.

The latest estimates are based on data from 2019, where the average annual expenditures for all consumer units totaled $63,036, which was a 3% increase from 2018.

As for retirees, which in this case refers to households led by someone who is 65 or older, 2019’s $50,220 figure (or $4,185 per month) has increased by $4,464 since 2016’s average of $45,756, or $3,813 monthly.

How big a portfolio would be needed to generate that $50,000 in annual retirement income? If you were to assume a yield of 3.75%, you’re looking at $1.33 million. Time to crank up the 401k auto-escalation anyone?

Here’s a quick breakdown of the five biggest expenses for retiree households:

  1. Housing: $17,472 per year or $1,456 per month (average U.S. household spends $20,679 annually on housing). This total includes mortgage or rent, property taxes, insurance, maintenance and repairs. It does not include utilities. A 2018 “Retirement and Mortgages” survey by American Financing, a national mortgage banker, found 44% of Americans age 60 to 70 have a mortgage when they retire, with 17% saying they may never pay it off. Another 32% predict they will be paying their mortgage for at least eight more years.
  2. Transportation: $7,492 per year or $624 per month (average U.S. household spends $10,742 annually on transportation. This includes vehicles, gas and insurance.
  3. Healthcare: $6,833 per year or $569 per month (average U.S. household spends $5,193 annually on healthcare). Health insurance comprises the bulk of healthcare spending for retirees and average U.S. households alike, while medical services, supplies and drugs are also included. According to a June 2020 report by Milliman, a healthy 65-year-old couple retiring in 2020 is projected to spend approximately $351,000 in today’s dollars ($535,000 in future dollars) on healthcare over their lifetime.
  4. Food: $6,599 per year or $550 per month (average U.S. household spends $8,169 annually on food). This includes both the food they eat at home ($4,063) and the food they eat out ($2,536).
  5. Utilities and Public Services: $3,810 per year or $317 per month (average U.S. household spends $4,055 annually on utilities and public services). This includes bills such as natural gas, electricity, water, phones and Internet access.



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