When you sign those final papers, retirement begins—and with it, a whole new life. Income may change, but expenses don’t stop. In fact, understanding what retirees actually spend becomes essential.
According to the recent U.S. Bureau of Labor Statistics (BLS) analysis, households headed by someone aged 65+ spent an average of $60,087 in 2023—about $5,007 a month. That’s 3.9% higher than in 2022, yet still 22% less than the average U.S. household.
Let’s break down how these costs add up, starting small and building to the biggest expenses.
7. Insurance And Pensions
Retiree households spent roughly $2,850 annually on insurance and pensions, based on BLS 2023 data. This includes life insurance, annuities, and pension contributions. While smaller than other categories, these payments matter for long-term protection and legacy planning.
It’s best to keep this expense steady because it provides financial security while still leaving room for everyday living costs.
6. Entertainment
The next expense on this expenditure ladder is entertainment. Leisure doesn’t disappear in retirement; as a matter of fact, for some, it increases.
On that note, on average, retirees spent $2,898 a year on entertainment in 2023, which includes hobbies and events. Subscriptions to media streaming and clubs are also part of entertainment expenses. While this is only about 5% of total spending, it reflects the importance of staying active and connected.
5. Utilities
BLS also reports that in 2023, essential services like electricity, gas, water, and phone totaled $4,307 annually, or about 7% of spending. These costs stay relatively stable each year, making them predictable compared with other categories.
The remedy for keeping these costs low includes monitoring usage and exploring energy-efficient options.
4. Food
In 2023, retirees spent $7,714 on food, with an average of $4,973 at home and $2,741 dining out. That’s nearly 13% of annual spending. While food is a fixed necessity, there’s flexibility in how much goes toward groceries versus restaurants. Also, those who cook more at home significantly reduce costs without sacrificing comfort.
3. Healthcare
Healthcare ranked third among expenses in the BLS report. In 2023, retiree households spent an average of $8,027 on healthcare—about 13.4% of their annual budget.
Most of this went toward insurance premiums, with the remainder covering medical services, supplies, and prescriptions. Unlike younger households, retirees see these costs rise steadily with age.
2. Transportation
Getting around isn’t cheap for retirees because it costs them approximately $9,033 a year in 2023. This includes all car payments, gas, and insurance. This makes transportation about 15% of total spending. Even without daily commutes, vehicle maintenance continues to weigh heavily on budgets.
Some retirees cut back by sharing a vehicle or using public transit. Uber and Lift are also common modes of transportation for retirees in today’s age.
1. Housing
Right at the top of the expenditure list is housing. As the largest category, housing averaged $21,445 annually—about 36% of total retirement spending, according to the BLS 2023 survey. That figure includes mortgage or rent, property taxes, insurance, maintenance, and repairs. For many households, downsizing or relocating becomes the most practical way to reduce this major expense.
Pulling The Numbers Together
According to the BLS Consumer Expenditure Survey (published September 24, 2024, and current as of August 1, 2025), retiree households spent a total of $60,087 in 2023. Housing, transportation, healthcare, and food drive the largest shares, while entertainment and insurance remain smaller but meaningful.
Understanding where the money goes gives retirees and those planning ahead a clear picture of what life really costs beyond the paycheck years.
