Here’s How Much Your Spending Will Drop As You Age (and the 1 Cost That Won’t)

Want some good news about retirement? You’re probably going to need a lot less money at 80 than you do at 60.

I’m in my 70s, so I’m not guessing here. I’ve watched my own budget shrink in ways younger me never would’ve predicted. And now the federal government has put numbers on it.

According to the latest Consumer Expenditure Survey from the Bureau of Labor Statistics, households headed by someone 55 to 64 spend $64,767 a year across six major categories. By 75 and up? Just $47,770.

That’s a drop of nearly $17,000 a year — automatic, and mostly painless.

Planners call these the go-go, slow-go and no-go years. In your 60s, you’re traveling and playing. In your 70s, you slow down. Beyond that, you’re mostly home.

Your wallet follows the same path. As we recently reported, the average retiree household spends about $5,100 a month. But that snapshot hides the trend: Nearly every category keeps falling as you age.

Every category but one, that is. Here’s where the money goes, from biggest drop to the lone exception.

1. Transportation: Cut by more than half

No expense falls off a cliff like getting around. Households aged 55 to 64 spend $15,085 a year on transportation. That drops to $11,414 at 65 to 74, then plunges to $6,855 past 75.

That’s a 55% decline. Why? No more commuting, for starters. Many couples also discover they don’t need two cars once nobody’s driving to work. Dump one and you shed a car payment, insurance, gas, maintenance and registration in a single stroke.

Sara (my wife) and I still have two cars. But I work from home, so one of them mostly collects dust. It’s on the list.

One caveat: Even as you drive less, car insurance rates climb after age 60. Shop your policy every year. It’s remarkably simple to do. For example, Insurify lets you compare real-time quotes side by side without the spam.

It takes minutes to check, and it costs you nothing. See if you’re overpaying — free, 5 minutes

2. Clothing: Dressing down pays off

Only transportation shrinks by a bigger percentage than apparel. The 55-to-64 crowd spends $2,032 a year on clothes and related services. Past 75, it’s $942 — less than half.

Makes sense, doesn’t it? No office means no office wardrobe. Retirement is the land of shorts, sneakers and T-shirts. And frankly, by this age you’ve already got a closet full of clothes you barely wear.

At least, that’s true for me. For Sara? Looks to me like she’s still very fond of clothes, and especially shoes. But then, she’s only 47.

3. Food: Smaller households, smaller grocery bills

Food spending falls from $10,214 a year at 55 to 64 to $7,168 past 75. That’s a 30% drop.

Part of it is biology — you simply eat less as you age. Part is household size: Kids move out, and sadly, spouses pass. And part is lifestyle, since endless restaurant nights lose their appeal for many older retirees.

Want to push that bill down further? Plenty of grocery stores offer senior discounts, some starting at age 55.

Quick aside — most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for more than 35 years. Want rock-solid advice? Sign up for the free Money Talks Newsletter. Takes 10 seconds. No fluff. No spam.

4. Entertainment: Fun gets cheaper

Entertainment spending slides from $3,706 a year to $2,888 by 75 and up — a 22% decline.

That doesn’t mean life gets boring. It means expensive fun gives way to cheaper fun: less travel and fewer concerts, more grandkids, gardens and golf with friends. Many retirees also cut subscriptions and services they regret not dumping sooner.

5. Housing: Still your biggest bill, but a lighter one

Housing costs drop from $27,019 a year at 55 to 64 to $21,999 past 75. It remains the biggest line item at every age, but it’s a $5,000 annual haircut.

The reasons are simple: paid-off mortgages, smaller households and downsizing. Just don’t assume moving to a smaller place is automatic savings. As we’ve reported, there are hidden costs of downsizing that catch plenty of retirees by surprise.

6. Health care: The one that won’t quit

Here’s the exception, and you saw it coming. Health care is the only major category that rises with age: from $6,711 a year at 55 to 64, to $7,715 at 65 to 74, to $7,918 past 75.

And those are just averages. Fidelity estimates a 65-year-old retiring in 2026 will spend $185,500 on health care over their lifetime — and that doesn’t include long-term care.

That last part matters, because long-term care is the wild card that can blow up any budget. If you haven’t thought it through, start with these ways to pay for long-term care without buying expensive insurance.

What this means for your plan

Most retirement calculators assume you’ll spend the same amount every year until you die. These numbers prove that’s nonsense.

Real spending looks more like a downhill slope with one uphill stretch. Budget more for the early, active years. Expect relief later. And set aside real money for health care, because that bill only moves in one direction.

Two warnings, though. First, these are averages across all households, including plenty that spend less because they have to, not because they want to. Your mileage will vary.

Second, don’t confuse falling spending with a green light to coast. Inflation eats away at every dollar, and plenty of retirement costs still get underestimated.

But if you’re staring at retirement projections and panicking? Relax a little. The finish line is probably cheaper than you think.