Dec 7, 2025
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The average American 65 years of age and up earns an annual income of approximately $65,468 in Q3 2025 according to the Bureau of Labor Statistics (BLS) (1). The latest data, from 2023, shows that same group spends roughly $60,087 yearly, or about $4,622 a month, according to the Federal Reserve Bank of St. Louis (2).
That income doesn’t leave a lot of extra cash for unexpected expenses or emergencies. The average American aged 65-69 has about $200,000 in retirement savings, according to an analysis of the 2022 Survey of Consumer Finances (SCF) data (3), and might still need to work even when they reach retirement age. High expenses often play a role.
These four categories of spending tend to eat into monthly expenses — here’s how you can shave some zeros off them.
1. Housing
Home costs represent the largest expense for retirees, amounting to $21,445 of their annual expenses in 2023, according to the Consumer Expenditures Surveys (CE) (4). Retirees who want to gain a leg up may want to consider downsizing as house prices remain high.
That could mean selling your current home for a profit, relocating to a less expensive market or seeking out cooperative living situations with other retired couples.
If you’re keen on staying where you are, you can make living there less expensive by getting the best deal on home insurance.
OfficialHomeInsurance's digital insurance marketplace compiles the best home insurance rates for your unique needs. In just two minutes OfficialHomeInsurance will round up a list of offers from leading insurers, potentially saving you saving you an average of $482 a year.
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2. Transportation
If you aren’t working as much – or at all – you might want to swap the car for public transit or a bicycle. Transportation is the second-largest spending category, making up $9,033 in annual expenses for retirees, according to CE figures.
If your partner has a car, consider getting rid of one vehicle to cut costs. Even if you own your auto outright, car insurance, maintenance and repair costs for two cars add up.
Whether you keep multiple cars or just have one, you want to make sure you’re not overpaying for car insurance.
By using OfficialCarInsurance.com, you can easily compare quotes from multiple insurers, such as Progressive, Allstate and GEICO, to ensure you’re getting the best deal.
In just two minutes, you could find rates as low as $29 per month.
4. Healthcare
Health spending makes up $8,027 in annual spending for retirees. One way to cut costs when health issues arise is to get easily affordable preventative care. That means staying up to date on screenings and vaccinations.
It’s also a good call to set aside an emergency fund should any immediate health issues come up. By putting these savings in a high-yield savings account, they can grow to their full potential and save you in a dire situation.
One way you could do this is with the Wealthfront Cash Account, which can help you build an investment base through a combination of high-interest rates and ease of access.
A Wealthfront Cash Account can provide a base variable APY of 3.50%, but new clients can get a 0.65% boost over their first three months for a total APY of 4.15% provided by program banks on your uninvested cash. That’s over ten times the national deposit savings rate, according to the FDIC’s October report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, you can ensure your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
4. Food
At $7,714, food expenditures account for the fourth largest expense for those 65 and over. Meal planning is one way to avoid overspending since it involves shopping for food items instead of regularly eating out — which can be an expensive habit.
Stick to your grocery list when you shop. Try using two tricks many veteran shoppers employ: never shop on an empty stomach and buy mostly (or exclusively) items on sale. Upscale markets tend to have higher prices, while chain supermarkets often offer the same high-quality organic items at far more reasonable prices.
Of course, while you can adjust your grocery budget, you still need to eat. But you can make the most of your essential food spending by setting aside some money when you make a grocery trip.
Acorns is an easy-to-use, automated savings platform that allows you to invest your spare change without thinking twice about it. They offer different membership options for all levels of investors, so you can choose the option that best supports your financial goals.
After getting set up, you just spend as you normally would. Acorns will round up your purchases to the nearest dollar and put the remaining change into a smart investment portfolio. Before you know it, your meal ingredients will become ingredients in a diverse investment portfolio.
Article sources
At Moneywise, we consider it our responsibility to produce accurate and trustworthy content people can rely on to inform their financial decisions. We rely on vetted sources such as government data, financial records and expert interviews and highlight credible third-party reporting when appropriate.
We are committed to transparency and accountability, correcting errors openly and adhering to the best practices of the journalism industry. For more details, see our editorial ethics and guidelines.
U.S. Bureau of Labor Statistics (1); Federal Reserve Bank of St. Louis (2); Survey of Consumer Finances (SCF) (3); Federal Reserve Bank of St. Louis (4)
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