The average retiree spends $4,818 on monthly expenses and 75% of that expenditure is for these (4) living expenditures.
a. Housing = 36^% of annual expenses for seniors, the largest expense for seniors
b. Transportation= second largest of expenses or 14%. Auto insurance rates increased 20% in 2023 alone.
c. Health Care = 13% of expenses
d. Food = 12% of expenses
The average citizen 65 years of age and up have annual pretax earnings of $60,359, and spends $57,818 yearly, or $4,818 a month, according to the Bureau of Labor Statistics (BLS). That income does not leave a lot of extra cash for unexpected expenses or emergencies. The average American aged 65-69 has about $200,000 in retirement savings (Federal Reserve data), and might still need to work even when they reach retirement age. High expenses often play a role in that late years’ work effort.
How do you stake up with these statistics?
Housing
Home costs represent the largest expense for retirees. As such, they may want to gain a leg up by considering downsizing as house prices remain high. Investigate the usage of the government HECM Lifestyle Mortgage, a deferred mortgage program for seniors. Check information at: https://sandrarobinsonrealty.kw.com/blog/hecm, Selling your current home for a profit may also leave room to stash away money for retirement, boost your emergency fund or pay off debt.
One drawback to selling might be that you will also pay a high price for a replacement home. However, consider smart options such as relocating to a less expensive market or seeking out cooperative living situations with other retired couples or family or even the purchase of ADU housing (Accessory Dwelling Unit: https://sandrarobinsonrealty.kw.com/multi-generational-housing-and-the-accessory-dwelling-units-adu-connection
Transportation
If you are not working as much or not at all, you might want to swap the car for public transit or another motorized unit. Transportation is the second-largest spending category, making up $8,172 in annual expenses for retirees, according to BLS figures. If your partner has a car, consider getting rid of one vehicle to cut costs. Even if you own your auto outright, car insurance, maintenance, and repair costs for two cars adds up.
Health Care
Health spending makes up $7,540 in annual spending for retirees. One way to cut costs when health issues arise is to get easily affordable preventative care. That means staying up to date on screenings and vaccinations. Exercise also appears in study after study as a top measure to lower the risk of many diseases. Even an activity as easy as walking can be beneficial.
Food
With 12% of annual expenses being for food, eating out should be limited. Meal planning is one way to avoid overspending as well. Stick to your grocery list when you shop. Try using two well-known tricks: never shop on an empty stomach and buy mostly items on sale. Upscale markets tend to have higher prices, while chain supermarkets often offer the same high-quality organic items at far more reasonable prices.
If eating out, cut down on portions or turn large portions at restaurants into a second meal you can take home for later. Make some of your favorite eat out meals at home. Modest changes in all these areas should see your retirement dollars go farther over time. And in retirement, time is an especially precious commodity that more money can help you enjoy.
Sandra Robinson, Realtor