What are Typical Average Monthly Retirement Expenses?

When it comes to living out their retirement, older adults with the most forethought spend plenty of time estimating their retirement expenses carefully. This makes plenty of sense; as you’re no longer working; you’ll need to ensure your retirement savings are up to the task of meeting those expenses without worry. Whether you’re about to retire or you’re long retired and looking to stretch your dollar further, let’s look at what some of the average monthly retirement expenses are, and more importantly, how the right living situation can help to minimize them.

Estimating the Average Retirement Expenses in a Year

While those in retirement typically have less expenses than when they were working — less commuting costs, for example, plus premiums on disability insurance and other costs related to working — the very act of living comfortably carries with it various expenses.

In fact, the U.S. Bureau of Labor Statistics states that in 2021, the average retiree household spends around $50,000 a year in living expenses. Interestingly, this compares favorably to the average for all households in the United States, which stood closer to $63,000, but it’s still a substantial figure. Let’s break down the biggest expenses in retirement.

Housing

Starting off with one the biggest expenses in retirement. Housing expenses add up, as this considers not just things like mortgage or rent but also paying property taxes, homeowner’s or renter’s insurance premiums, and any maintenance or repair costs for the property. On top of that, you’ve got your utility payments as well, as you’ll need heat, electricity, and other expenses like trash removal, landscaping, and television, phone, and internet bills. In other words, even if your house is paid off, living there is still one of your highest expenses. So make sure you account for all that in your budget.

Healthcare

Right behind housing is healthcare, and this one is just as important. Health insurance, paying for medical services and supplies, and filling prescriptions are major expenses, and with older adults often depending on high-quality medical care to remain healthy well through retirement, this becomes essential. Medicare covers some of these costs, but not all. If you ever need any form of long-term care, your monthly expenses will skyrocket, so it’s best to plan for this well in advance.

Transportation

Those well into retirement tend to see a reduction in the amount they pay for transportation costs. This is especially true for anyone who commuted regularly to work. Yet this expense doesn’t disappear entirely – you will still need to pay for the expenses tied to your personal vehicle. This includes car loan or lease payments, gas and insurance, maintenance, and registration fees. Even if don’t have a personal vehicle, public transportation costs will also factor into your estimated retirement expenses. You just wont’ be paying as much as you did to get to work!

Of course, the other expense associated with transportation is travel, and that could very well increase. Now that you’re retired, the only thing holding you back from vacationing wherever you want is ensuring you’ve budgeted for it.

Food and Entertainment

Between making your own meals and dining out, food costs can pile up as well. This is the one expense that may be less likely to change drastically in retirement – just because you’re no longer working doesn’t mean you don’t still need to eat, after all!

That said, you may decide you want to eat out more, maybe getting breakfast at your favorite local diner. Plus, you’ll now have more time for more entertaining — seeing more movies, going into the city more often for shows or museums, participating more in your favorite hobbies, or whatever it is you want to do. Therefore, it’s a good idea to keep aside a section of your budget for entertainment.

Managing Expenses by Moving to a Retirement Community

Estimating what your average monthly retirement expenses are is just the first step – managing those expenses is another thing entirely. There are dozens of ways you can reduce your overall expenses individually, but there’s one sure fire method for addressing them all at once, and that’s moving to a retirement community.

More specifically, moving to a continuing care retirement community (CCRC) helps you manage nearly every expense you have to take into account during retirement.

This might sound hard to believe, but it’s quite true. Let’s go through each of the expenses listed above and see how living in a CCRC helps manage them. 

• Housing costs are controlled by moving to a retirement community, as you no longer need to worry about expenses like property taxes. Additionally, recurring bills for necessities like maintenance, landscaping, and repair are all rolled up into just one monthly fee that’s often less expensive overall than paying these bills individually, especially if something goes wrong like you need a new water heater or roof. 
• Healthcare expenses are one of the best reasons to move to a CCRC, as these communities can provide long-term care no matter how it changes over time. Additionally, with what’s typically called a Type A long-term care contract, the cost of that care won’t change over the length of your stay, which avoids the risk of your medical costs increasing over time. 
• Transportation costs are kept to a minimum while living in a retirement community because many CCRCs offer transportation options and support. This can cover trips to local doctors as well as shopping centers and other places of interest. This can help reduce your overall reliance on a personal vehicle, reducing the expenses tied to that vehicle. Plus, so much of what you might travel for will exist right on campus — from a fitness center and swimming pool to walking trails, art rooms and woodworking shops, performance centers, and more. 
• Your food and entertainment expenses can also benefit from living in a retirement community. CCRCs offer a wide variety of amenities that provide opportunities to enjoy your retirement to the fullest. Meanwhile, on-campus dining options help you control your food costs by providing low-cost alternatives to dining out while still offering that fine dining experience. 

Planning for Retirement Expenses

Living your best life during retirement can be a challenge if you’re constantly worrying about what everything is going to cost you. If you want to enjoy your retirement to the fullest, estimating and managing your retirement expenses carefully is one of the best ways to ensure you have the resources you need to live the life you want. As one of the best options to control your retirement costs in one package, retirement community living is an excellent choice for any cost-conscious retiree looking to get the most out of these work-free years.

To explore some of the best continuing care retirement communities available in the country, check out the offerings at Acts Retirement-Life Communities.