The 10 Most Common Spending Categories in Retirement

"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."

"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."

Rising cost of living is prompting Americans to consider how retirement income will be allocated across expense categories. Nationwide Financial and The Harris Poll surveyed 1,831 adult Americans about which budget categories they expect to consume the largest shares of post-retirement income. Planning for retirement requires estimating future spending rather than focusing only on a target nest egg. A common benchmark suggests needing about 80% of pre-retirement spending, though many retirees average closer to 70% and some may need more than 100% depending on healthcare, housing, or lifestyle. Survey responses reflect expectations, not actual BLS expenditure data.

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