Retirement is often seen as the golden era of spending—you’ve borrowed money in your younger days, saved up, and paid off debts in your prime, and now it’s time to kick back and use that nest egg during your retirement years.
According to the Bureau of Labor Statistics (BLS), the average American retiree spends around $4,345 a month, or $52,141 yearly. But what exactly are retirees spending their money on? Here are the top 10 areas where retirees are most likely to spend their money.
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1. Housing
The biggest slice of your retirement budget pie will go to housing and all the costs that go with it, according to the data. The BLS figures show that home costs, including mortgage interest, property taxes, utilities, maintenance, and insurance, account for 36% of the annual expenses among average Americans aged 65 and older, translating to $14,034 per year.
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2. Health care
While this category depends on your overall health in your golden years, it still is the big tamale of retirement spending. According to a report from RBC Wealth Management, the average healthy American at age 65 spends close to $5,700 on medical care per year. A smart way to cut health costs is to stay up to date on screenings and vaccinations, exercise, eat a healthy diet, and maintain an overall healthy lifestyle.
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3. Transportation
Just because you’re not driving to work in your retirement doesn’t mean transportation costs disappear. In fact, transportation—often overlooked—ranks as one of the heftiest expenses in retirement, with retirees spending about $7,160 annually on average, according to BLS figures. For those looking to trim these expenses, switching to more frugal options, such as public transportation or biking, is a savvy move.
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4. Travel
“Travel” often tops the bucket list for many retirees, who see their golden years as the perfect time for the adventure of exploring the world. In fact, the 21st Annual Transamerica Retirement Surveyfound that a whopping 65% of American workers are looking forward to hitting the road (or the skies) once they retire. But this adventure typically costs retirees about $11,077 each year.
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5. Food
While retirees spend 20% less on food than a preretirement household, a considerable chunk of their retirement budget still falls into this category. According to the BLS figures, retirees spend an average of $5,126 annually on food, with $3,301 spent on meals at home and $1,825 on dining out.
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6. Entertainment
Retirement has its perks, like not having to drag yourself to the office every morning. But with all that extra free time, retirees often find themselves spending more. The average American over the age of 65 spends an average of $2,026 per year on entertainment. This cost includes a range of activities like movie tickets, the latest electronic gadgets, and various hobbies.
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7. Pets
Being a retiree often means a quieter house, which can be a lonely affair. So, it’s no surprise that many retirees turn their attention to their furry companions. However, these furry friends come with a price tag. On average, seniors 65 and older spend about $403 a year on their pets.
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8. Kids & grandkids
Retirees with kids and grandkids are often more financially involved than you might think. According to an AARP study, a whopping 94% of grandparents provide financial help to their grandkids, forking out cash for gifts, a big treat like a Disney World vacation, or even a hefty chunk of change into their grandkids’ 529 college savings plans.
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9. Fitness & wellness
Turns out, retirement might just be the push you need to get in shape. According to the data, about 53% of retirees in the US participate in physical activity devoting around 13% of their yearly spending to staying fit and having fun with leisure activities.
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10. Charity
Retirees are pretty generous, handing out an average of $2,515 each year in cash contributions. This includes donations to causes they care about, like charities, religious groups, schools, or political organizations.
This article was produced and syndicated by MediaFeed.
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