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For most retirees, their biggest concern is the size of their nest egg. Having enough money to live comfortably and not outlive your savings is probably a top priority. But the question about how much money you need to save hinges on another, perhaps equally important question: How much do you plan to spend?
After all, your annual budget determines the “magic number” you need to target. And for a better idea of what your retirement budget could look like, it’s helpful to consider the budget of a typical retiree.
With that in mind, here’s a closer look at the most recent data from the Federal Reserve’s Consumer Expenditure Survey (CES) (1).
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A typical retirement budget
The average retired person spent roughly $59,616 during 2024 (the most recent year surveyed by the Fed). That’s roughly $5,000 a month.
Perhaps unsurprisingly, the biggest line item on this budget is housing. A typical retiree spent $22,079 annually on shelter-related costs in 2024. That cost alone is nearly 37% of the total average budget, or $1 in every $3 spent during the course of a year.
Those numbers suggest that If you’re looking to tighten your budget, housing could be your top priority. And you wouldn’t be alone. In fact, nearly 41% of Americans between the ages of 65 and 79 had a mortgage on their primary home, according to a 2023 report by the Joint Center for Housing Studies of Harvard University (2).
So, if you’re one of these mortgage holders, shopping around for a good interest rate could make a meaningful difference.
As for those who own their home free and clear, you may want to find other ways to lower costs. Shopping around for a good home insurance policy, for instance, could move the needle for your annual budget. Plus, referral services like OfficialHomeInsurance.com make it easier than ever to find the coverage you need without the hassle of calling multiple providers for quotes. Simply fill out a few details and you could save an average of $482 a year.
Other major expenses
Besides housing, the largest expenses for retirees were transportation, food and healthcare: A typical retiree in America spent $9,244, $8,021 and $7,735, respectively, on these categories in 2024.
Combined, these three items account for 42% of the typical retirement budget.
The good news for retirees and older Americans is that many outlets offer seniors discounts on everything from prescription drugs to groceries. Keeping an eye out for these discounts could help you tighten up your transportation, food and healthcare budget.
Another way to save on costs is to shop around for robust car insurance. According to Forbes (3), the average cost of full car insurance in 2026 is $2,434, so it makes sense to want to trim that down as much as possible.
That’s where comparison platforms like Insurify can give you a hand. By letting you view and compare quotes from top-ratedproviders instantly, it helps ensure you aren’t paying a hidden “loyalty tax” to your current insurer. Just answer a few basic questions, and Insurify will show you the most affordable deals in as little as three minutes.
Not only is the process 100% free, but you could also save up to 15% by bundling your car and home insurance.
Similarly, GoldenCare can help you find the right insurance policy to cover long-term care needs. Long-term care insurance offers coverage for the costs of in-home assistance, nursing homes or assisted living facilities.
Without proper planning, paying for long-term care could deplete your retirement fund. In many cases, the burden of paying for care often falls on family members — potentially straining their finances.
GoldenCare offers different options based on your needs, including hybrid life or annuity with long-term care benefits, short-term care, extended care, home healthcare, assisted living and traditional long-term care insurance.
Ultimately, with a little planning and the right mix of insurance policies, you can chip away at your housing, transport, food and healthcare budget to save thousands of dollars over the course of your retirement.
