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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


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


Housing, food, transportation and entertainment costs all tend to decrease from early retirement years, while health care expenses rise considerably.

Starting point: Essential expenses

Invest in your priorities:
Learn more about your health life priorities

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.

Age 65
Age 75
Age 85
$90,155 per year

Starting point: Essential expenses

Invest in your priorities:
Learn more about your home life priorities

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

Invest in your priorities:
Learn more about your leisure life priorities

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.

Click photo


of retirees want a retirement with peak experiences that stand out from everyday events.10



Time per day those ages 75+ spend on leisure activities—the most of all ages11


Average annual amount spent eating out for those ages 65+12

Across their lifetimes, retirees achieve the greatest balance of health, free time, fun and emotional well-being between ages 61–75.13

Estimate annual retirement expenses

Invest in your priorities:
Learn more about your finance life priorities

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

Sample monthly expenses14

$1,664 $1,343 $1,261 $1,637
$113 $102 $87 $134
$597 $498 $529 $600
$274 $243 $186 $212
$608 $588 $545 $550
$343 $228 $243 $273
$693 $573 $639 $577
$568 $379 $413 $389
Annual Total:

per year for those ages 65+ in the West Midwest South Northeast

Select another region

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.

The Merrill® Personal Retirement Calculator can help you estimate how much you'll need to retire and see if you're on track.

Concerned about saving enough for retirement? Check out these helpful ideas and tools from Merrill.

After estimating your expenses, consider ways to maximize your income and savings to help cover them.

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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