The Average Retirement Budget in the U.S.

When it comes to the average retirement budget, studies report a wide range of responses. A 2022 survey by the Employee Benefit and Retirement Institute (EBRI) found that half of individuals around retirement age spend less than $2,000 per month, equal to less than $24,000 per year. The Social Security Administration, meanwhile, said 2020 median expenditures for people 65 and older totaled $34,088. The Bureau of Labor Statistics (BLS) reported that 2022 expenditures for households headed by someone 65 or older were $57,818 on average, a figure that may be inflated by a small number of very high retiree spending reports. Your own average retirement budget may vary from these averages based on your location and personal preferences.

For help preparing your own individualized retirement budget estimate, consider consulting a financial advisor.

EBRI Budget Details

EBRI’s Spending in Retirement Survey, which asked nearly 2,000 Americans aged 62 to 75 about their spending patterns. While approximately one-half of this number described spending less than $2,000 per month, about a third estimated their outlays between $2,000 and $3,999 a month. Another 16% spent between $4,000 and $6,999, and 3% reported expenses of $7,000 or more.

Housing represented the largest expense category for the seniors EBRI surveyed, consuming nearly a third of their overall expenditures each month. Food was the next highest-expenditure category.

In addition to gathering dollar amounts for expenditures, EBRI also questioned retirees about other topics, including how they felt about their budgets, average retirement savings, and their preparedness for unexpected costs. About 27% of the EBRI respondents said their spending was higher than they felt they were able to afford. And when it came to emergency savings, 70% or so said they had set aside sufficient reserves to cover three months of expenses.

BLS Survey Results

The BLS figures came from Consumer Expenditure Surveys, which administers telephone interviews to 3,700 households and collects surveys filled out by 2,500 more households. The BLS average retirement budget for people aged 65 and over is higher than EBRI’s, but that may be partly because BLS reports spending data for households consisting of 1.7 people on average, rather than for individuals.

BLS also breaks down spending into 14 major categories. The following figures are for the categories that make up the lion’s share of retiree spending:

Social Security Spending Figures

The Social Security Administration used data from a 2020 Census Bureau survey of households, the same source used by BLS, for its spending analysis. However, Social Security reported median figures rather than the mean or average given by BLS. This may explain in part why the BLS spending figures were higher, since averages can be influenced by a handful of very big-spending outliers.

Additional details from the Social Security study of retiree households showed that 20% spent less than $20,000 and 12% spent $75,000 or more. Two-thirds of the households had total expenditures between $20,000 and $75,000. The largest income group was $20,000 to $29,999, reported by 21.4%.

Individualized Estimates

While these survey results suggest the average retirement budget for a typical retiree, any individual’s spending in retirement can vary considerably, as the EBRI report shows. One way to get an estimate for your personal retirement budget is to use a percentage of your pre-retirement income. Commonly recommended percentages range from 55% on the low end to 80% on the high end as an estimate for your expenses in retirement.

Using this percentage of pre-retirement income suggests that if your annual income immediately before retiring is $100,000, for example, a retirement budget of between $55,000 and $80,000 is likely to be realistic. BLS survey results indicate this is similar to many retirees’ experiences. In its survey, for example, households headed by people in the next-youngest group, aged 55 to 64, spent $78,079 per year, indicating a decline of about 26% for people after age 65.

Curious whether you’re on track for retirement? Run your numbers through SmartAsset’s retirement calculator to view projected savings growth and potential income streams.

Average Retirement Budget Management

Housing is the single largest expense identified by both retiree budget surveys, accounting for a total of around one-third of all costs in retirement. Housing figures typically consist of outlays for shelter, such as rent, as well as utilities, maintenance and other housing-related budget items.

Because it’s the single largest item among major expense categories, retirees who are looking to cut costs often consider reducing housing outlays. Housing costs vary by location more so than other major expenses such as food, transportation and healthcare. So those nearing retirement, and uncertain about being able to make ends meet without working, often consider moving to where they can retire at a lower cost as a way of making their budgets fit their incomes. Some retirees also choose to relocate to states that do not tax retirement income.

How to Live on a Budget in Retirement

Living on a budget in retirement requires careful planning and disciplined execution. Start by assessing your fixed income sources like Social Security, pensions, and retirement account distributions. Then evaluate your essential expenses, including housing, healthcare, utilities and food. This foundation allows you to create a realistic spending plan that matches your retirement lifestyle with your available resources.

Understanding where your money goes is crucial for retirement budgeting success. Use a notebook, spreadsheet, or budgeting app to monitor all expenditures for at least three months. This practice reveals spending patterns and highlights areas where adjustments might be necessary. Regular tracking helps prevent the gradual spending increases that can undermine even the best retirement plans.

Effective retirement budgets include room for both unexpected expenses and occasional splurges. Consider creating separate funds for emergencies, healthcare surprises, and special experiences. This approach provides peace of mind while allowing for life’s pleasures and inevitable challenges without derailing your overall financial plan.

Bottom Line

Surveys of retiree spending range from less than $24,000 a year for about half of retirees to nearly $58,000 for the average retiree. Differences in the way surveys analyze and report data may account for much of the difference. However, the individual average retirement budget can vary even more widely. People estimating their retirement spending often use percentages of pre-retirement income to come up with their estimates.

Retirement Budget Tips

• A forecast of your retirement spending is a fundamental part of financial planning. A financial advisor can help you generate a realistic estimate that accounts for your circumstances. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• The age you retire can also affect your average retirement budget, so it can be helpful to determine the best age for you to retire.

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