Spending During Retirement
Planning for retirement can be stressful, with a number of unpredictable costs in the mix. In fact, a 2018 survey from TD Ameritrade found that 3 out of 5 Americans do not know how much they will need to save to fund their lifestyles beyond age 65.
While spending during retirement can vary widely depending on health and location factors, it is important to project what your costs may be during retirement sooner rather than later. Consider this breakdown of average monthly spending by retirement-age U.S. households from the Bureau of Labor Statistics a good place to start.
Largely dependent on your location, housing costs can make up the largest portion of your spending during retirement. Even if your mortgage is paid off, do not underestimate costs in taxes, insurance, utilities, and repairs.
An area that has shown to be cheaper during retirement, transportation costs will remain
a factor with car payments, gas, insurance, and travel.
Health care: $499
By far the category which will vary the widest, health care costs are shown to increase as you age. When projecting your medical expenses, take into consideration Medicare and your employer’s offerings.
Similar to transportation, food costs decrease on average with age. Still, it remains a top expense during retirement and can fluctuate by location.
Though a primarily controllable category, retirees can often underestimate their expenses for entertainment.