How Much Do People in Their 60s Spend in Retirement in 2025?

On average, Americans think they need $1.26 million to retire comfortably, according to Northwestern Mutual’s 2025 Planning & Progress Study.

Let’s compare that to what retirees in their 60s are actually spending. According to the U.S. Bureau of Labor Statistics, the average household headed by someone age 65 or older spent just over $60,000 in 2023, the most recent figures available. The 4% rule would translate that annual number into $1.5 million, which is what the average retiree would need to sustain the lifestyle they’re actually living. (That is, if you withdrew 4% of your $1.5 million nest egg per year, adjusted for inflation, you’d be able to afford a $60,000 a year lifestyle over a 30-year retirement.)

What this means, really, is that what the average retiree thinks they should have for retirement isn’t enough. With these numbers, the average estimate noted above ($1.26 million) is $240,000 short of the actual amount. Retirees should plan to accumulate an average of $1.5 million for retirement, as they spend an average of $60,000 per year.

Where the Money Actually Goes

Housing dominates retirement budgets. Including utilities, it claims about one-third of total spending for households headed by someone who’s 65 and older. Transportation comes in second at about 15% of the budget, followed by health care, at about 13%. Food also accounts for about 13%. Here’s a fuller breakdown.

Why Spending Decreases for Older Adults, but Risks Increase

Financial planner Michael Stein coined the terms “go-go,” “slow-go,” and “no-go” years to describe how retirement spending evolves over time. In your 60s, which are typically your more active years, you’re more likely to spend more on travel, dining out, and leisure. As you age past your 60s, your energy and mobility will likely decline, so you’ll spend less on travel and active hobbies.

Researchers have thus identified a familiar pattern: real (inflation-adjusted) spending declines every year beginning in early retirement. Research by David Blanchett indicates that this totals to a real spending decline of approximately a quarter (26%) between the ages of 65 and 84.

But there’s a critical caveat: these averages don’t account for long-term care. Seven out of 10 people turning 65 will need some form of long-term care in their lifetime, and two in 10 will need it for longer than five years. The costs are staggering. As of 2024, a private room in a nursing home costs $10,646 per month, representing a 9% increase from 2023. Assisted living costs $5,900 per month on average, a 10% jump from 2023.

What This Means for How Much You Can Withdraw

Fears about long-term care costs help explain why so many retirees keep a tighter grip on their savings than financial models suggest. A 2025 study by Blanchett and Michael Finke found that married retirees withdraw just 2.1% of their savings annually—about half what the traditional 4% rule says is safe. (Single retirees withdraw even less: 1.9% of their savings annually.)

Almost half (46%) of retirees say they spend less than they could because they’re worried about running out of money, yet 78% say they’re confident they’ll have enough.

Almost half (46%) of retirees say they spend less than they could because they’re worried about running out of money, yet 78% say they’re confident they’ll have enough.

That disconnect means some retirees could be deferring experiences in their active years—travel, family gatherings, their bucket-list items—while sitting on savings they may never use.

The balance is deeply personal. Some retirees can afford to loosen the purse strings, while others are right to worry.

The difference often comes down to how much you have in guaranteed income: those with more pension or Social Security income tend to give themselves more permission to spend. Those relying mainly on savings may need to stay cautious, or find ways to create that income floor themselves.