Why is 24/7 Wall St. covering this?
- The cost of living continues going up, meaning Americans saving for retirement need a sense of where their money will be going after quitting the rat race.
- Nationwide Financial surveyed over 1,800 people of all ages to understand what they expected their retirement income to be spent on.
- While none of the categories are surprising, where different expenses land on the list may raise some eyebrows.
- Also: Are You On Track to Retire? Take This Quiz and Find Out (Sponsored)
While most people focus on the dollar amount they want to retire with, that is putting the cart before the horse. To understand how much you need to save, you first need to figure out how much you are going to spend in retirement.
The rule of thumb for retirement says to plan on needing around 80% of what you’re spending pre-retirement. Of course, this is simply a general benchmark, and every individual’s needs will be different. Many retirees actually spend closer to 70% of pre-retirement income (on average), while others may need more than 100% depending on healthcare, housing, or lifestyle. Across a broad swath of the population, people have pretty similar ideas on what categories they will be spending their money on.
Nationwide Financial had The Harris Poll survey 1,831 adult Americans to get a sense of what each generation expected would consume the largest percentage of their income after they retired. Here’s a look at 10 budget categories where retirees believe they are likely to spend more. (It’s worth noting that these are expectations, not actual retiree spending patterns. In reality, Bureau of Labor Statistics (BLS) Consumer Expenditure Survey data shows housing and healthcare are often much higher and investing/saving are usually lower.)
This post was updated on September 28, 2025 to clarify the 80% rate rule as simply a benchmark, Fidelity’s healthcare estimate as of 2025, food inflation data, and percentage of discretionary spending.
10. Investing
It pays to never stop investing, even in retirement. While your portfolio won’t be nearly as aggressive as it was when you were younger, continuing to put money into the market makes sense. Retirees anticipate spending 4% of their money on investing activities.
9. Debt
Entering your retirement years debt-free would be nice, but realistically there will still be loans and credit cards to pay off. It was at the bottom of the list, but some retirees still expect to be paying on their student loans. Overall, though, about 4% of a retiree’s income will be spent on servicing debt.
8. Entertainment
Hey, that’s what retirement is all about, right? Living it up a little while you have the time, but don’t overdo it. Entertainment costs are expected to amount to 6% of retiree income.
7. Transportation
While transportation expenses will decline in retirement as the daily commute to work goes away, not all such costs will disappear. Spending on gas should drop, but vehicle maintenance and repair expenses may rise as vehicles age, which means retirees may spend 6% of their income just getting around.
6. Savings
This may fall into one of the surprising categories as you might expect saving money might stop once you get your gold watch, but investing, it’s smart to keep putting money away. Americans believe they will spend as much as 7% of their retirement income on savings.
5. Vacation
The only thing shocking about spending on vacation costs in retirement is how far down the list it comes. When most people talk about retirement, it includes all the places they want to visit that they didn’t have time to see when they were working. Retirees are budgeting about 7% of their income. Maybe that’s what the savings are for.
4. Healthcare costs
No one is surprised that healthcare costs will be a big expense in retirement. Americans expect 10% of their income will go to healthcare, but it could be more. Fidelity Investments found 65-year olds retiring in 2025 can expect to pay $167,000 in healthcare over their retirement.
3. Groceries
Americans expect to pay 16% of their retirement income on groceries, but with eating at home costs surging, that figure may be low. From 2019–2023, food-at-home prices rose 20%–23%. Eating out is even worse, as food-away-from-home rose about 23%–24%.
2. Housing
Similar to transportation costs, while many retirees may have paid off their mortgages, there is still the general upkeep and maintenance on a home. Others will still have a mortgage payment in retirement or will rent, which is now prohibitively expensive. Americans expect to pay another 16% of their income in retirement on housing.
1. Monthly bills
The biggest expense of all will be just the basics of homeownership. The Nationwide Financial survey found retirees expect to pay 18% of their income on things like utilities and the cable bill.
Key takeaway
Because retirement is considered a time of leisure, discretionary expenses like vacation and entertainment will consume 20–25% of a retiree’s income. But it’s not the largest category. That goes to essential costs like healthcare, groceries, and monthly bills. They will account for roughly 75% of a retiree’s total income. Plan accordingly.
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