Housing. Starting off with one the biggest expenses in retirement. Housing expenses add up, as this considers not just things like mortgage or rent but also paying property taxes, homeowner's or renter's insurance premiums, and any maintenance or repair costs for the property.
The three biggest budget items for the average U.S. household are food, transportation, and housing. Focusing your efforts to reduce spending in these three major budget categories can make the biggest dent in your budget, grow your gap, and free up additional money for you to us to tackle debt or start investing.
A closer look at the data reveals retiree households spent $12,545 (58%) on shelter—which, for owner-occupied properties, represents mortgage principal payments, $4,526 (21%) on mortgage interest/charges and property taxes, and another $3,427 (16%) on maintenance, repairs, insurance, and other expenses.
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
Compared with CU s aged 55–64, those aged 75 or older allocated 32 percent less of their expenditures to transportation (13 percent compared with 19 percent) and 24 percent less to other expenditures (16 percent compared with 21 percent); the category of other expenditures includes alcohol, personal care, reading ...
According to the same 2022 BLS study, the average American's monthly expenses are $6,080, 1 which is about 77% of the average monthly income before taxes. This list of expenses covers everything from housing, health insurance and food to entertainment, personal care products and books.
The $1,000 per month rule is designed to help you estimate the amount of savings required to generate a steady monthly income during retirement. According to this rule, for every $240,000 you save, you can withdraw $1,000 per month if you stick to a 5% annual withdrawal rate.
According to data from the Social Security Administration, as of January 2024, the average monthly retirement benefit payment was $1,909.01, which comes to about $22,322 per year.
“Seventy to 80% of pre-retirement income is good to shoot for,” said Ben Bakkum, senior investment strategist with New York City financial firm Betterment, in an email. But he adds that there are other variables to consider, such as inflation, market downturns and changes in spending patterns.
Rich retirees: In the 90th percentile, with net worth starting at $1.9 million, this group has much more financial freedom and is able to afford luxuries and legacy planning.
“According to the strategy, retirees tap 4% of their nest egg the first year. For future withdrawals, they adjust the previous year's dollar figure upward for inflation,” per CNBC. According to Morningstar research, that “safe” withdrawal rate declined to 3.7% in 2025.
According to Medicareful Living, “The average monthly grocery bill for a single person can be between $165 and $345! With the average Social Security benefit in 2021 being $1,543 and the median rent for a one-bedroom apartment in the U.S. being around $1,078, your monthly budget may be pretty tight.”
Many retirees continue working part time, spending an average of 1.42 hours per day on paid work or income-generating activities. Retirees spend more time volunteering, socializing and engaging in hobbies like reading and home maintenance than younger groups.
Seniors often prioritize purchasing food and groceries to meet their daily nutritional needs. They tend to focus on purchasing fresh produce, pantry staples, and ready-to-eat meals. Additionally, seniors may also purchase dietary supplements and vitamins to support their health and well-being.
The 80% Rule for How Much Money You'll Need
Financial planners commonly forecast retirement spending by assuming you'll need 80% of your pre-retirement income. It's important to realize this is just a general rule.
While this figure can vary based on factors such as location, family size, and lifestyle preferences, a common range for a good monthly salary is between $6,000 and $8,333 for individuals.
Ideally, you want to have 20% of your take-home pay left over after paying all of your bills.
Quick Take: The 75/15/10 Budgeting Rule
The 75/15/10 rule is a simple way to budget and allocate your paycheck. This is when you divert 75% of your income to needs such as everyday expenses, 15% to long-term investing and 10% for short-term savings. It's all about creating a balanced and practical plan for your money.
More than two-thirds of retirees wish they would have saved more and on a consistent basis — and half wish they hadn't waited so long “to concern themselves with saving and investing for retirement,” according to the researchers.
How Do Low-Income People Retire? Low-income people may retire by cutting their expenses, downsizing their homes, taking Social Security benefits, and/or applying for financial assistance through government benefit programs.
Senior Citizens' Saving Scheme
SCSS is arguably the first choice for most retirees.