Retirement at age 70 is often viewed as a period of stability, but the financial reality for middle-class retirees can be quite different. While many retirees experience predictable costs, recent reports highlight that their monthly expenses can be higher than anticipated. For example, the average retiree in the U.S. spends around $5,000 per month, with middle-class retirees typically facing expenses of approximately $5,400.
According to a report from Marca, these costs reflect the increasing demands placed on retirees, especially in areas such as healthcare, housing, and daily living expenses. This discrepancy between income and expenses raises an important question: Have you saved enough for retirement?
Where the Money Goes
Nearly 99% of retirees’ spending is devoted to four major categories: housing, food, healthcare, and transportation. According to the Bureau of Labor Statistics, housing remains the largest expense, even for those who have already paid off their mortgages. Healthcare costs continue to rise every year for older individuals, while food and utility costs keep increasing, placing a strain on retirees living on fixed incomes.
For most retirees, Social Security remains the primary source of income. The average monthly Social Security benefit is $1,976, which is much less than the $5,000–$5,400 needed to cover average expenses. Even with retirement savings, a significant gap remains.
The Savings Gap
The typical 401(k) balance in the U.S. for a person at age 60 is approximately $210,000. However, by the time they reach age 70, this balance drops to about $106,000. Applying the 4% withdrawal rule, this results in about $700 per month in income.
Even with Social Security benefits and retirement savings combined, the majority of retirees can cover less than half of their monthly expenses. This lack of savings often forces retirees to make tough decisions, such as downsizing their homes or returning to part-time work.
A Growing Concern
Financial experts emphasize that inflation, rising healthcare costs, and longer life expectancy can worsen the gap between expenses and savings. Many retirees, who thought they were adequately prepared, find themselves in a much more difficult situation than expected.
As one financial analyst told Investopedia:
This isn’t just a math problem—it’s a human problem. Behind every statistic is a retiree deciding between groceries, prescriptions, or visits with family.
This reality hits home for many retirees who face difficult choices in a context of aging and ever-increasing living costs.
Experts recommend advanced planning for retirement. Here are some tips:
- Maximize contributions to your 401(k) and IRA retirement accounts.
- Delay claiming Social Security benefits until age 70 to secure higher monthly payments.
- Control expenses by downsizing your home and saving specifically for medical bills.
- Diversify income streams through part-time work, annuities, or investments.
