The cost of living in retirement (2024)

FAQs

How much do most retirees live on per month? ›

Average Retirement Spending

According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month.

How Much Does It Cost to Retire? According to the latest data from the Bureau of Labor Statistics (BLS), a typical American age 65 and older will spend $60,844 each year. That's about $20,000 less than those in the 55-64 age bracket and more than $33,000 less than individuals in the 45-54 age bracket.

Financial experts say you can expect to spend between 55% and 80% of your annual employment income each year in retirement. Here's how to calculate expenses. To fully prepare your finances for retirement, consider working with a financial advisor.

This rule of thumb suggests that you'll have to ensure you have 80% of your pre-retirement income per year in retirement. This percentage is based on the fact that some major expenses drop after you retire, like commuting and retirement-plan contributions.

Housing. Starting off with one the biggest expenses in retirement.

If your Social Security and other retirement savings allow you to retire on $4,000 per month, you're likely in good shape to retire in many cities nationwide or abroad. Aside from the most expensive markets, $48,000 annually is enough for a comfortable retirement for many retirees.

Those unexpected expenses often derail people's retirement plans, such as a healthcare emergency or long-term care expenses. Other potential unexpected costs could include: A major home repair or upgrade, such as modifying a bathroom to be wheelchair accessible. Providing financial support to children or grandchildren.

More? Financial planners often recommend replacing about 80% of your pre-retirement income to sustain the same lifestyle after you retire. This means that if you earn $100,000 per year, you'd aim for at least $80,000 of income (in today's dollars) in retirement.

How much money does the average person retire with? ›

What are the average and median retirement savings? The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.

However, it may help you to know that according to recent Motley Fool research, the average American aged 65 and over spends $48,872 a year. As such, if you have access to a $50,000 annual income in retirement, it may be enough to cover your expenses.

Assuming an inflation rate of 4% and a conservative after-tax rate of return of 5%, you should aim for a savings target of $1.3 million to fund a 30-year retirement that begins at age 67. This would give you an investment portfolio that produces about $50,000 a year in income.

The 4% rule for retirement budgeting suggests that a retiree withdraw 4% of the balance in their retirement account(s) in the first year after retiring, and then withdraw the same dollar amount, adjusted for inflation, every year thereafter.

The ideal monthly retirement income for a couple differs for everyone. It depends on your personal preferences, past accomplishments, and retirement plans. Some valuable perspective can be found in the 2022 US Census Bureau's median income for couples 65 and over: $76,490 annually or about $6,374 monthly.

Percentage of retirees with $1 million

The dream of retiring with a million-dollar nest egg is a common aspiration, but the reality paints a different picture. According to estimates based on the Federal Reserve Survey of Consumer Finances, only 3.2% of retirees have over $1 million in their retirement accounts.