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Retirement: What will it really cost?
How retirement costs may break down
When you’re planning for retirement, you first need to
figure out what your expenses are likely to look like. What
each person will need varies widely, but there are certain
expenses you can count on. Here’s a breakdown of some of
the likely costs.1
Click to see how costs change as you age
Entertainment 10%
Clothing 3%
Transport-
ation
14%
Health 8%
Charity/Gifts 5%
Home 46%
Food 11%
Entertainment 11%
Clothing 3%
Transport-
ation
12%
Health 10%
Charity/Gifts 5%
Home 45%
Food 11%
Entertainment 8%
Clothing 3%
Transport-
ation
10%
Health 11%
Charity/Gifts 6%
Home 46%
Food 11%
Entertainment 6%
Clothing 3%
Transport-
ation
7%
Health 19%
Other 8%
Home 44%
Food 11%
Housing costs are highest earlier in retirement.
The average annual amount spent on housing
decreases 25% from ages 55–64 to ages
75+
—from $21,192 to $15,806.2
25%
The percent of licensed drivers relative to the
total population cuts in half from age 65 to
79
—from 7% at ages 65–69 to 3.5% at ages
75–79.3
Annual household expenses decrease
from $55,087 for retirees ages 65–74 to $43,623 for
those over age 75.4
$55,087$43,623
Housing, food, transportation and entertainment
costs all tend to decrease
from early retirement years, while
health care expenses rise considerably.
Starting point: Essential expenses
If you’re relatively young, you may not think much about
your health care expenses. But expenses can mount as you age.
To anticipate your health care costs, look at your
parents’ medical history and your own health.
Average annual health care costs by age5
Individuals with moderate health on Medicare in 2020
can expect to pay more in annual health care costs as
they age.
$90,155 per year
Starting point: Essential expenses
While housing costs may decrease in retirement if you have
paid off your mortgage or if you plan to downsize or move to a
less expensive area, housing remains the largest expense on
average for retirees. When estimating costs, don’t
forget to account for home repairs or renovations.
Next: Lifestyle expenses
If you plan to do a lot of traveling or take up an expensive
hobby, you may need to allocate more funds to this category.
These are also the easiest expenses to cut back on if your
financial situation changes.
Estimate annual retirement expenses
Retirement expenses for someone age 65+ can vary by region.
Use this calculator as a starting point to consider your
future expenses—and the income stream you’ll need
to support them.
Step 1
Select your region
Step 2
Click the categories to add up expenses
Your retirement may last for decades—so it pays to be
prepared. Life changes can alter your plan, so review your
savings plan annually to make sure you stay on track.
Footnote 1 Employee Benefit Research Institute (EBRI), based on data from the Consumption Activities and Mail Survey (CAMS), November 2019
Footnote 2 Bureau of Labor Statistics, Consumer Expenditure Survey, 2019
Footnote Footnote 3 Federal Highway Administration, 2018
Footnote 4 Consumer Expenditure Survey, "Table 1300. Age of reference person: Annual expenditure means, shares, standard errors, and coefficients of variation," 2019
Footnote 5 Merrill "Healthcare costs in retirement," 2020. Assumes Medicare Parts A, B and D, as well as Medigap Plan G premiums. Includes vision, dental and hearing. Poor, Moderate, Excellent health costs reflect insurance cost data associated with these self-reported health classifications. Health insurance cost estimates provided by HealthView based on historical data and actuarial projections as of 2020. Conditions that may affect your health status include, but are not limited to cancer, cardiovascular disease, high blood pressure and high cholesterol. Smoking may worsen your health status.
Footnote 6 National Clearinghouse for Long-Term Care Information, U.S. Department of Health and Human Services, October 2020
Footnote 7 Genworth 2019 Cost of Care Survey
Footnote 8 National Association of Realtors, 2020
Footnote 9 Bureau of Labor Statistics, Consumer Expenditure Survey, 2019
Footnotes 10,13 Merrill Lynch/Age Wave, Leisure in Retirement: Beyond the Bucket List, 2016
Footnote 11 Bureau of Labor Statistics, 2019
Footnote 12 Bureau of Labor Statistics, Consumer Expenditure Survey, 2019
Footnote 14 Expenses rounded based on data from the Consumer Expenditure Survey, U.S. Bureau of Labor Statistics, 2019. Numbers may not total exact sums due to rounding.
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