What Is the Biggest Expense for Retirees, and How Do You Minimize It?

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When planning for retirement, you must consider all the costs you’ll be facing. Between healthcare costs, monthly bills, housing, travel and transportation, and other expenses, retirees often face a daunting financial future. But what is the biggest expense for retirees? And what difference does it make? As you’ll learn later down this post, one-third of an average American retiree household’s costs go to a single expense category. Knowing that category will help you plan accordingly while you’re getting ready for retirement. As it turns out, you can minimize those expenses to significantly impact your budget during retirement, but to do so, you need to start acting sooner rather than later.

In this post, you’ll learn where most of your monthly income goes, how those expenses are structured, and what you can do before and after retirement to manage them.

How Do Our Expenses Change as We Age?

Most of our monthly income goes towards essentials like housing, food, and transportation. These are called “fixed costs” because they’re roughly the same every month and don’t change much from year to year. But as we age, our fixed costs tend to increase, and other variable costs become more important.