How to Retire at 50. How Much We Intend to Spend Monthly in Early Retirement

With inflation, tariffs, and the changing geopolitical dominance, will this generation of Americans be able to retire? Maybe, you don’t know until you try. Most people don’t even think about retirement until they hit their mid-50s. By then, it’s harder to pull off without undue financial stress.

As people approach the age of 59, they often consider transitioning into retirement with less than $200,000 saved. For most Americans, that transition culminates at 68 if their bodies don’t give out. By that time, navigating retiring successfully, will require significant adjustments to their budget and lifestyle.

While every individual has different spending habits during their golden years, it’s important to note how much the average retiree spends each month. Doing so allows us to plan SMART+ER. This framework can lead to living more comfortable years while avoiding instances of Unretiring.

Unfortunately, a wave of retirees will have to step back into the workforce. As inflation flares and prices fluctuate, for most households, their median retirement savings will not be enough.

Average Retirement Spending

According to the Bureau of Labor Statistics (BLS), the median income of someone 65 and older in 2023 was $57,252 ($4,771 per month). Unfortunately, in 2023, the average annual expenditures for all consumers rose to $77,280 ($6,440 per month). That’s a shortfall of $20,000 and it is way too much of a gap.

In 2023, the expenses of younger retirees are greater than those of older retirees: $5,000 for people between the ages of 65 and 74 and $4,419 for those 75 and older. This is primarily caused by high early expenditures that typically impact a retiree’s Sequence of Returns.

Retirement spending often follows a U-shaped curve. Expenditures (spending) start high, dipping in the middle, and rising again later. Understanding this curve and planning allows you to maximize your retirement spending and make the most of your golden years without the induced risk of running out of money.

How Much Should You Plan To Spend in Retirement?

While the average monthly spending for retirees may be helpful, it doesn’t indicate what your retirement will look like. It’s the same concept of financial literacy. It’s not the panacea for your money issues, it’s a means to analyze how you interact with money. To estimate your retirement spending, start with your current spending.

Most financial planning experts recommend using the 80% rule to determine how much money you’ll need. That means you should expect to use 80% of your pre-retirement income to cover expenses in retirement. With any luck, this percentage considers that some pre-retirement expenses might fall off while you might pick up other expenses like charitable giving, gifts to family, travel, and enhanced healthcare.

For example, let’s assume your current household income is $90,000. Factoring in the 80% rule, you’ll want to plan on needing at least $72,000 per year.

The shortfall of this method is that it doesn’t account for higher-than-expected inflation and new expense outflows. These expense outflows could be a technology change that might create a new monthly subscription or an annual fee. There was a time when Microsoft Office Suite was a once-in-a-blue-moon purchase, now it’s an annual subscription. There are also massive downturns and unexpected expenses to account for. “Check once and measure twice.”

Setting and forgetting might not be as efficient or risk-free. As we saw in Q1 and April 2025, investment values can change drastically. Those investments aren’t just for the rich. These situations impact our 401ks and IRAs.

What can we do? It depends. Again, financial literacy aims to provide an understanding of your finances, not a prescribed way to spend and live your life. If you need a more tailored approach, or if your wealth is more complex, you may need to seek out a Certified Financial Planner.

The Baseline Expenses You will Need to Retire (Beyond 2040) – $180,000 per year ($15,000 per month)

To better understand how much income you’ll need in retirement, you should understand what retirees spend most of their income on each month.

Note that 2024 retiree expense reached nearly $80,000, beyond 2040, that price will double.

“Predicting exact household expenses for 2040 is difficult, but we can look at trends and factors that could impact them. Specifically, retirement savings shortfalls, rising healthcare costs, and inflation are key areas to consider.” (Cost of Doing Nothing, published May 2023) 

With this in mind, I estimate that most millennials and Gen-Zers should be shooting to cover as much as $180,000 in annual expenses to maintain their current lifestyle in retirement.

Considering that retirement can range as high as 20 years, you must plan and understand your financial expectations. Try not to blame the messenger. It costs what it costs.

Here are some of the biggest expenses you’ll have:

Housing and Utilities – at least $2,000 per month in the first 10 Years

Unless you own your home and you’ve managed to pay off your mortgage, housing will be your biggest retirement expense. The BLS report found that, on average, people 65 and older spend $18,872 annually for housing. This often represents 30%-40% of your annual expenses. It’s supposed to be no more than 25%. With the way the housing or Rental market is headed, it’s fair to push total housing expenses up to $2,000 monthly or $24,000 annually.

If your housing expenses are higher than you’re comfortable with, you could consider downsizing into a smaller home. You could also consider moving somewhere that has lower housing prices. Some people are even opting to live overseas to benefit from the financial geo-arbitrage. Once you’re retired, you have much more flexibility on where you live. Especially if family and friends are in other parts of the country, you might want to or even need to move closer to them.

Utilities get a little more expensive once you retire. You will be at home more often and need the house at a more comfortable temperature. Americans 65 and older spend $3,921, or 7.5% of their expenses. Simple things like ensuring your windows and doors have proper seals to avoid air loss and installing smart thermostats can help save you money on your heating and cooling bills. Knowing the age of the bigger appliances such as the AC or water heater can be critical to avoid the unexpected. Big ticket items can run you as little as $2,000 to $40,000 for a new roof or foundational issues.

Note—a significant portion of retirees, around 40% of homeowners aged 65 and older, still have mortgages. This is a notable increase from previous decades, according to studies from the Joint Center for Housing Studies at Harvard University. Hopefully, it only takes about 10 years for many retirees to cut out mortgage debt.

Dining In and Dining Out – $1,000 per month

Food expenses comprise an average of $6,490, or 12.4% of your yearly expenses. In mass, Americans are eating out more or getting food delivered. The latter adds more service fees and as much as a 15% tip. In some places, eating out will carry an easy surcharge of 25%. It’s not worth it.

There are a lot of ways to reduce food costs. By meal planning each week, you can create a grocery list of everything you need. This can help keep your caloric consumption down while avoiding impulse snacks.

Meal planning helps you avoid nights when you don’t know what to cook. Some people opt to use bulk purchasers like Costco, or even couponing. Most grocery stores have an app with coupons. Some like Publix have a ton of great staple buy one and get one free specials weekly.

Healthcare – Up to $750 per month

According to Fidelity Investments‘ 2024 Retiree Health Care Cost Estimate, a 65-year-old individual retiring today can expect to spend an average of $165,000 on healthcare expenses throughout their retirement. This can average out to $7,030 each year, or 13.5% of their overall expenses.

For a couple, the average total health care is estimated to be around $315,000. 

Healthcare is one expense that typically increases in retirement compared to earlier years. This is due to potential illnesses, medical procedures, and long-term care costs. Keeping up with preventative care can go a long way in helping minimize some potential expenses.

In Northwest Washington, DC, in-home healthcare services for retirees can cost around $29.25 per hour (approximately $5,477 per month) for 24/7 care. It’s very expensive.

Transportation – $450 per month

The next largest expense for retirees is transportation. This accounts for $7,160 yearly, or 13.7% of your overall expenses.

If you’re no longer working, you can either opt to live in a walkable town with quick access to public transportation. If not, the consistent upgrade to a “new car” every decade can be taxing. Eliminating your car payment could help save a significant amount of money each year.

If you’re married, you could consider becoming a one-car household. This might bruise some egos striving for independence, however, I can promise that it’s a nice saving of nearly $500 per month. Although transportation costs can be significant, cities typically provide discounted fairs for those who qualify.

Discretionary Expenses to Retire Comfortably – $50,000 Annually (about $4,167 per month)

The discretionary expenses category is where the travel activities, grandkids, charity, and experiences expenses fall. It’s important to know that Discretionary is not a NEEDS-based category but a WANT. It can range widely for a lot of people or it may even be reduced to zero.

It comes down to income versus expenses.

There are only so many dollars flowing around:

• Travel and Activities – $24,000 Annually ($2,000 per month)
• Charitable Contribution and Community Support – $500 per month
• Family Reunions and Generational Wealth Opportunities – $25,000 every 2-3 years
• Education, Hobbies, and Business Creation – $10,000 estimated but it would vary

So, what’s the Monthly Retirement Receipt?

I’ll start by saying your monthly retirement expenses depend on you. Although I put in some very high numbers, I figured it’d be more interesting to dream big and scale down. It beats scaling down and realizing that prices will increase, and you won’t have enough. Always estimate your cost to be greater than you intend and your income to be less than expected.

I’m looking at spending around $22,500 per month which includes our accelerated payments to principal on the final overseas home. This will put our household expenses near $270,000. This about would likely need to be scaled down to $250,000. See what I just did there; I was conservative with our approach.

Might need to take on additional spending carefully.

As you make your way toward retirement, it can be helpful to understand how much the average retiree spends. More importantly, it’s essential to understand how much you (and your spouse) may want to spend to live comfortably.

Additionally, today’s prices are cheaper than tomorrow’s. Expect to double your current annual expenses every 20 years. For example, if your expenses in 2024 are $70,000, by 2044, this number will climb to $140,000 (easy). That’s how money works. It’s all about global supply meeting global demand.

Run the numbers and determine exactly how much money you’ll need. The amount may surprise you.

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