Sound retirement planning depends on your ability to accurately project your spending after your career comes to an end. However, even the best-laid plans can fall apart if they leave the door open for unpleasant financial surprises — one big one, in particular.
The following analysis outlines how much the average retiree spends every month and reveals a potentially massive, but often underestimated expense that can sneak up on seniors, forcing them to revise their spending plans, restrict their budgets and reduce their lifestyles to keep up.
Average Spending Falls by 73% in Retirement
According to an April Bureau of Labor Statistics (BLS) report, people ages 61 to 78, spend an average of $70,207 per year, or $5,850.58 per month. The data shows that average spending for the pre-retirement age group is $95,692, which is roughly 27% more than the average spending at retirement age.
The oldest retirees, aged 79 and above, spend the least — just under $50,000 per year, or approximately $4,167 per month.
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The Big Expense That’s Lying in Wait
According to Kiplinger, health care is the No. 1 “stealth cost” in retirement. AARP concurs, citing health care as the expense that retirees are most likely to underestimate or overlook altogether.
Enrolling in Medicare can be confusing and overwhelming, and many retirees fail to plan for the numerous expenses associated with coverage. Additionally, acute illnesses, which become more likely as you age, are hard to plan for, can strike without warning and can quickly become expensive to manage, particularly if the condition is chronic.
If an unexpected expense is going to derail your retirement plan, medical costs are likely to be the culprit.
Don’t Underestimate the Cost of Health Care, as Many Retirees Do
The annual Fidelity Investments Retiree Health Care Cost Estimate found that someone who turned 65 in 2024 can expect to spend $165,000 in combined health care expenses over the course of their retirement.
However, the average American expects to spend only $75,000 on healthcare — less than half the real amount. One year later, the 2025 estimate jumped by 4% to $172,500 — and retirees were no better prepared.
One in five Americans reported never considering health care expenses in retirement and 17% had taken no action at all to plan and prepare.
With that said, if you haven’t already considered health-related expenses or long-term care, consider consulting a financial advisor or retirement planner about how you can incorporate these costs into your retirement budget.
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This article originally appeared on GOBankingRates.com: How Much Retirees Spend Every Month Plus the One Expense That Shocks Them
