How Much The Average US Retiree Spends On These 6 Living Costs

Retirement marks a significant shift in how people manage their finances. Without a steady job and paycheck, most retirees depend on fixed incomes from Social Security, pensions, and personal savings. This makes careful budgeting crucial for long-term security, especially when every dollar counts. According to the latest U.S. Bureau of Labor Statistics Consumer Expenditure Survey, retirees 65 or older spend about $58,000 annually on average.

Spending varies widely based on location, health, and lifestyle. Where you live has the biggest impact: retirees in the Northeast average over $63,000 per year, while those in the South spend about $48,600, a gap of roughly 29.6%, meaning Northeastern retirees spend nearly one‑third more. Age also shapes spending patterns. According to the Federal Reserve Bank of St. Louis, Retirees aged 65–74 tend to spend more overall than those 75 and over, often because they are more active, travel more, and may still have mortgage payments or higher transportation costs. Older retirees typically reduce discretionary spending and have fewer large debts.

Here is how much the average U.S. retiree spends on these six major living costs: housing, healthcare, transportation, food, insurance, and entertainment. Housing is the largest expense, followed by healthcare, transportation, and food. As retirees age, some costs, such as transportation and leisure, decline, while others, like healthcare, remain steady or even increase. Understanding these shifts helps retirees plan for changing needs over time.

Housing is the single largest expense for retirees, averaging about $21,000 annually according to the Federal Reserve. This includes rent, insurance, utilities, household supplies, and, for homeowners, mortgage interest, property taxes, maintenance, and repairs. Retirees aged 65–74 spend approximately $22,000 per year, often because they still have mortgages, reside in larger homes, have higher utility bills, or invest in upgrades and repairs.

By contrast, retirees 75 and older spend about $19,850 annually on housing. This drop reflects fewer mortgage payments, downsizing to smaller homes, moving in with family, or moving to an assisted living facility. However, housing choices in retirement are often shaped by more than just cost, they reflect health needs, proximity to family, and lifestyle preferences. 

Housing costs vary sharply by region:

• Northeast: $24,996

• Midwest: $18,206

• South: $18,255

• West: $24,137

The Northeast and West have the highest housing costs, especially along the coasts, where property values and taxes are high. The Midwest and South are more affordable, with cheaper cost of living. Lifestyle choices also matter. Younger retirees may prioritize location and amenities, while older retirees often focus on affordability and convenience. Many also downsize or relocate to lower‑cost areas, which can free up funds for other needs. Some older retirees choose age‑restricted communities or assisted‑living facilities, which can offer social activities, maintenance services, and healthcare support, but often come with higher monthly fees. Others opt for "aging in place," investing in home modifications such as ramps, grab bars, or walk‑in showers to make their existing homes safer and more accessible.

Transportation is the second-largest expense for retirees, which the Federal Reserve notes average $8,300 per year. This includes vehicle ownership, gas, insurance, repairs, and public transit. For retirees aged 65–74, transportation costs average $10,200, making it their second‑largest expense. For those 75 and older, however, transportation is the third-largest expense, with an average annual cost of $6,400, representing a 60% decrease in transportation costs.

Younger retirees often drive regularly, travel longer distances, and may own more than one vehicle, resulting in higher expenditures on gas, insurance, and maintenance. Older retirees typically drive less, sometimes selling their vehicles and relying on family, friends, or public transit. Older retirees may limit their driving for safety reasons, avoid long trips, experience mobility and health issues, or opt for cars with lower costs.

Regional averages show the West's transportation costs are 15% to 45% higher than the national average.

• Northeast: $8,811

• Midwest: $8,100

• South: $7,089

• West: $10,010

There are several reasons for this. Many Western states, such as Montana, Wyoming, and Alaska, have extensive rural areas where driving is the primary means of transportation. Even in cities, places in the West are often spread out, so people have to travel longer distances to reach stores, doctors, or other services. Gas prices in the West are also the highest in the country, according to AAA, which makes every trip more expensive. Additionally, public transportation isn't as widely available as it is in cities like New York or Washington, D.C. Outside of major hubs such as Los Angeles or San Francisco, buses and trains cover fewer routes and operate less frequently. This means that most people, including retirees, rely heavily on cars.

The Federal Reserve puts healthcare costs for retirees at an average of $7,800 annually, covering Medicare premiums, supplemental insurance, prescription drugs, dental and vision care, and hospital visits. Unlike other expenses, the differences between age groups are minimal, amounting to just $230, even though older retirees often require more care.

This is primarily due to Medicare, which begins at age 65 and covers a substantial portion of hospital care, doctor visits, and prescription drugs (if enrolled in Part D). Nearly all retirees have similar baseline coverage, so out‑of‑pocket differences are smaller than in categories like housing or transportation. Supplemental insurance (Medigap or Medicare Advantage) also helps keep costs predictable. While healthcare needs increase with age, some expenses are covered more fully, and older retirees may limit elective procedures or opt for lower-cost plans.

There are regional differences in healthcare as well:

• Northeast: $8,572

• Midwest: $7,861

• South: $7,262

• West: $8,258

Hospitals, clinics, and medical offices in the West and Northeast regions face higher wages, rent, and utility costs, which get passed on to patients. Medical professionals, including doctors, nurses, and technicians, earn more in high-cost areas, which increases the overall price of care. In many parts of the Northeast and West, large hospital systems dominate the market. Fewer competitors mean less pressure to keep prices low. A study from KFF shows that in highly concentrated hospital markets, prices can be 12%–54% higher than in areas with more competition.

Food costs average $7,300 annually for retirees, as per the Federal Reserve, covering groceries and dining out. Retirees aged 65–74 spend approximately $8,400, while those aged 75 and above spend $6,300, representing a decrease of roughly 33%. Younger retirees dine out more often, entertain guests, and buy a wider variety of groceries. Older retirees often have smaller appetites, dine out less, and prepare simpler meals.

Dining‑out spending shows a clear gap: $3,000 annually for 65–74 versus $2,000 for 75+. Younger retirees are generally more mobile, travel more frequently, and continue to drive regularly, making it easier for them to visit restaurants and cafés. Older retirees may face health or mobility challenges, making dining out less appealing. Cooking at home becomes more common, both for health and cost reasons, and some rely on prepared meals or family assistance.

The cost of food varies widely depending on the region:

• Northeast: $8,220

• Midwest: $7,000

• South: $6,706

• West: $7,973

Food costs are highest in the West and Northeast, up to 25% more, due to higher transportation expenses, wages, and overall living costs that drive up the price of food. In these regions, much of the food must be shipped long distances, and stores face higher rent and labor costs. The Midwest and South generally have lower prices, though big cities in those areas can still be expensive.

Retirees spend an average of about $3,100 per year on insurance and pension‑related costs, according to the same Fed data. This category covers life insurance premiums, annuities, supplemental health insurance, and contributions to Social Security or private retirement plans. Some retirees continue to fund IRAs, annuities, or other accounts after age 65, particularly if they have part-time work or self-employment income. These contributions are counted as "personal insurance and pensions" in the Consumer Expenditure Survey.

Supplemental health insurance (Medigap), long-term care coverage, and life insurance premiums can be substantial, especially for retirees seeking to reduce out-of-pocket medical costs or establish a financial legacy. Retirees who continue to work must also pay Social Security and Medicare payroll taxes on their earned income.

Spending in this category varies sharply by age. Those aged 65–74 tend to spend more in this area, averaging around $4,200 annually, because many are still actively building retirement savings, maintaining multiple insurance policies, or working part‑time, which requires paying Social Security and Medicare payroll taxes on earned income. For retirees 75 and older, spending drops to about $2,000, reflecting the end of active contributions and, in some cases, the cancelation of policies that are no longer needed. These costs can also vary by region, with higher‑cost areas seeing elevated premiums for insurance and financial services. 

Entertainment and leisure are the next largest discretionary expense, averaging about $2,700 per year according to the Federal Reserve. This category includes fees and admissions, as well as pets, toys, hobbies, playground equipment, and other recreational services. Retirees aged 65–74 spend approximately $3,300, which is 40% more than the average of $2,000 for those aged 75 and above.

Younger retirees are typically healthier, more mobile, and more willing to travel or go out with friends. They may take vacations, attend concerts, or pursue multiple hobbies. Many still drive, making it easier to reach theaters, museums, and other venues. Older retirees often slow down, spend more time at home, and choose lower-cost activities, such as attending local events, streaming movies, or engaging in home-based hobbies.

Location also plays a role:

• Northeast: $3,034

• Midwest: $2,563

• South: $2,176

• West: $3,185

Costs are highest in the Northeast and West, driven by higher ticket prices, cultural events, and tourism. Outdoor activities and tourism contribute significantly to higher costs. States like California and Hawaii have some of the highest prices for leisure activities. The Midwest and South tend to have a lower cost of living, which keeps leisure spending down.

Miscellaneous items and personal expenses are a broad category that make up the remainder of a retiree's budget, the Federal Reserve notes, averaging about $8,000 per year. This includes a wide range of everyday costs such as clothing, footwear, personal care products and services, and reading materials. Retirees aged 75 and older tend to spend more in this category than those aged 65–74, approximately $8,400 compared to $7,600, largely due to their higher levels of cash contributions and gifts.

On average, those 75 and older contribute $5,200 in cash and gifts annually, nearly double the $2,800 given by younger retirees. This shift reflects changes in priorities and financial circumstances. By age 75, many have paid off mortgages, eliminated car loans, and reduced discretionary spending on travel, dining, and entertainment, freeing up more of their fixed income for charitable donations or family support. For some, giving is part of intentional legacy planning, allowing them to see the impact of their generosity during their lifetime. Charitable contributions may also be structured for tax efficiency, such as through qualified charitable distributions from IRAs.

A study froM Nature.com shows that charitable giving often increases with age due to greater financial stability, higher disposable income, and a stronger sense of social responsibility. Besides cash contributions and gifts, younger retirees spend more on clothing, personal products and services, and other miscellaneous items. Regional cost differences also influence spending on personal services and goods. Areas with a higher cost of living tend to have more expensive items.