Your mortgage is paid off. The kids are grown. There are no tuition bills, no commuting costs, no 401(k) contributions pulling from each paycheck. And yet, the average American household headed by someone 65 or older spent $61,432 in 2024, the latest year for which federal data is available. That works out to about $5,120 a month.
That number surprises a lot of people who assumed retirement would be cheaper. It often is cheaper than peak working years, but not by the margin many expect. Three categories drive most of the bill: housing, food, and healthcare. Together they account for roughly 60 cents of every dollar a typical retiree spends.
Here is what those categories actually cost in 2026, based on the most current federal data available, and what the figures mean for anyone planning their retirement budget right now.
Housing costs that don't quit
Among households headed by someone aged 65 to 74, housing averaged $22,329 per year in 2024, or roughly $1,861 a month. That is the single largest spending category for this age group, ahead of transportation, food, and healthcare. It is also the figure that most surprises people who assumed a paid-off house would make housing essentially free.
The BLS number covers a lot more than a mortgage or rent payment. It rolls in shelter costs, property taxes, utilities, phone service, household operations, furnishings, maintenance, repairs, and homeowner's insurance. Property taxes alone average $3,003 a year for this age group. Maintenance, repairs, and insurance add another $3,558. Utilities, fuels, and public services tack on $4,653. The monthly housing bill keeps generating charges even when the deed is clear.
There is real variation within that average. Retirees who own their homes outright in low-tax states fare better than renters in high-cost metros, or homeowners who have not paid off their loans. About 39% of homeowners in the 65 to 74 age group are still carrying a mortgage. For them, shelter costs are considerably higher. Housing also tends to represent a larger share of spending for retirees than for younger households, consuming over 36% of annual spending compared to 33.4% for all American households combined.
What food spending actually looks like in retirement
Retirees spend meaningfully less on food than working-age households. The average American household spent $10,169 on food in 2024, while retired households come in around $7,940 a year, or about $661 a month. The gap reflects smaller household sizes, less eating out on a work schedule, and more time to shop and cook at home.
That said, $661 a month is not a small number. And food costs have not been kind to retirees on fixed incomes. Grocery prices rose more than 25% between 2020 and 2024. Meat, poultry, fish, and eggs saw the sharpest single-year jump of any food category tracked by the BLS in 2024, up 21.5%. Even with food-at-home price increases moderating to about 2.3% in 2025, the cumulative damage to household budgets is real. A retiree spending $500 a month on groceries in 2020 would need closer to $630 today to buy the same basket.
Food spending in retirement also shifts in ways that do not always lower the bill. Many retirees eat out more, not less, as social activity increases. Travel, holidays with family, and the simple reality of having more time to enjoy restaurants can push dining costs higher than expected. The split between groceries and eating out depends heavily on lifestyle. A retiree cooking most meals at home in a mid-cost area will spend far less than the average. One dining out several times a week in a high-cost city will spend considerably more.
Healthcare, the number most people underestimate
This is where retirement budgets most frequently fall apart. The average 65-to-74-year-old carries a healthcare bill that is higher, as a share of income, than any other age group in the country. Among households headed by someone in their early 70s, healthcare spending averaged $7,387 per year in 2024, with health insurance alone accounting for $5,318 of that total. These figures come from BLS Consumer Expenditure Survey data and reflect what households actually report spending, not projected estimates.
Medicare covers a lot, but it does not cover everything, and it is not free. The standard Medicare Part B premium in 2026 is $202.90 per month, up from $185 in 2025. That alone is $2,434 a year for a single person, before any deductibles, coinsurance, or supplemental coverage. Part D prescription drug plans carry their own premiums, and while the Inflation Reduction Act capped out-of-pocket drug costs at $2,100 for 2026, that cap only applies to covered drugs. Dental care, vision, and hearing remain almost entirely uncovered by original Medicare, and those costs average $3,500 to $5,000 a year out of pocket for retirees who need regular care in all three areas.
The long-term picture is even more daunting. A 65-year-old retiring in 2025 can expect to spend an average of $172,500 in healthcare costs throughout retirement, according to Fidelity's most recent annual estimate. That figure covers Medicare premiums, copays, and prescription drug costs, but excludes long-term care entirely. Add long-term care and the number climbs considerably higher. The annual cost of a private room in a nursing facility now runs well above $100,000 in many states. Healthcare is also the one category in retirement that reliably outpaces general inflation: Part B premiums have grown 20% faster than inflation over the past decade.
How this stacks up against Social Security
The average Social Security retirement benefit reached $2,079 per month in early 2026, after the 2.8% cost-of-living adjustment took effect. That is $24,948 a year. Total average annual spending for households 65 and older is $61,432. The gap between the two is about $36,500, which has to come from savings, a pension, a spouse's income, or continued work.
It is worth noting that the “average” retiree budget hides an enormous range. A retired couple in a paid-off home in a low-cost state with good health and no long-term care needs can live comfortably on considerably less than $61,432. A single renter in a high-cost metro managing a serious chronic condition can blow well past it. Location makes a particularly large difference. Housing costs in California or New York for the same standard of living can run two to three times higher than in Mississippi or West Virginia. Healthcare costs vary by state too, though less dramatically.
The three categories together add up to something worth planning around carefully: housing costs that stay high even after the mortgage is gone, food costs that seem manageable but have absorbed years of inflation, and healthcare costs that grow faster than anything else in the budget and are harder to control. None of this requires panic, but all of it requires an honest look at the numbers before you stop working, not after.
Learn how to stretch your retirement savings and maximize your Social Security benefits for a comfortable retirement:
18 ways to stretch your retirement savings without feeling poor: The goal isn’t to pinch every penny — it’s to protect the big stuff and trim quiet leaks. Here are simple moves that keep freedom high and stress low.
18 budgeting rules that actually work for people over 50: Money habits change as we age. In this post, discover budgeting rules that fit your income and shift of priorities when you’re over 50.
15 clever strategies to maximize your Social Security benefits: Use the facts in this post to make choices that raise your monthly check for years.
