How much money do you plan to spend in retirement every month?
The Employee Benefit Research Institute’s (EBRI) 2022 Spending in Retirement Survey, which delves into understanding the impact of the COVID-19 pandemic on Americans’ retirement plans, indicates what retirees are spending every month and their top expenses.
How Much Do Retirees Spend Every Month?
Here are some key findings from the report:
- About half of retirees (48%) reported spending less than $2,000 a month compared to the year 2020 when 42% said they spent that much. One in three (33%) said they spend between $2,000 and $3,999 monthly.
- About four in five (79%) said they try to stick with a monthly spending plan, while 8% reported that they don’t do so.
- On average, retirees reported that nearly a third of their monthly income goes toward housing expenses, with food being the second-largest expenditure.
Conducted during the summer of 2022, the survey contains answers from almost 2,000 U.S. retirees between the ages of 62 and 75. They were asked to explain how their spending patterns and retirement plans have changed over the past 22 years.
Here’s a look at average retirement costs every month, according to the EBRI survey.
Retirees’ Average Monthly Spending by Expenses
| Expense Types | Percentage of Income |
|---|---|
| Housing | 30% |
| Food | 25% |
| Transportation | 12% |
| Medical and Health Insurance | 8% |
| Entertainment | 8% |
| Clothing | 7% |
| Other Expenses | 6% |
| Out-of-Pocket Medical Costs | 5% |
Read the complete survey from EBRI.
Final Thoughts
If you haven’t retired yet, you may be a bit antsy about whether you’ll have enough money to live comfortably in your later years. Money expert Clark Howard wants you to know that there are some specific steps you can take to put yourself in the best position possible for retirement.
With housing being a major expense for retirees according to the EBRI survey, Clark feels strongly that you should do all you can to lower that expense before retirement. Here are some ways to do that:
- Work longer if you can.
- Pay off your mortgage.
- Downsize your living arrangement.
That last point is something Clark has done personally. Here’s what he says about living in a smaller dwelling:
“We utilize a much higher percentage of the dwelling, and our overhead with the property is much, much lower,” he says. “And so it worked for us; it might work for you if you’re looking for a place.”
Here are a few other retirement expenses and tips to lower them.
