The monster expenses eating up over 50% of retiree’s budgets

Something’s devouring more than half of the average retiree’s income every year, and it’s not medical care or cruise vacations.

Recent research from Nationwide Retirement Institute shows that everyday expenses like food and housing are draining Americans’ finances in retirement. On average, retired respondents to a survey of 1,000 U.S. adults between 60 and 65 say they’re spending 53% of their budgets on basics.

Nearly a third of these retirees report that they’re not comfortable financially — so how are they to cope?

Some say they may have to get a job to supplement their high cost of living. Of the 1 in 3 retirees who are planning around or actively considering a return to the workforce, 45% say it’s out of financial necessity.

The Nationwide report also revealed how difficult it can be for workers nearing retirement to budget for their golden years — particularly at a time when the price of everything from gas to health insurance is becoming increasingly unaffordable.

And rising prices aren’t the only wild card: Over a third of the respondents who are already retired say their Social Security benefits are lower than they anticipated.

How much you need for retirement depends on where you choose to settle, the amount of debt you have, lifestyle choices and other variables, like your health and marriage status. Financial advisors will tell you there isn't a magic number, but U.S. households 65 and older spent an average of $4,345 a month in 2021, according to the U.S. Bureau of Labor Statistics.

You can find out more about the report, including how respondents feel about the future of Social Security, by reading my latest story.

— Mary Ellen Cagnassola, Money reporter

Speaking of budgets, a recent study suggests that millennial couples should have at least $290,000 saved by the time they’re 65 to maintain their quality of life in retirement. That goal could be hard to achieve for a generation that’s saddled with student debt — but there are still ways to get there with strategic planning, the authors say.

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• Charles Blahous, senior research strategist at George Mason University Mercatus Center, appeared on C-SPAN to discuss the future of Social Security, and how 2024 presidential candidates’ policy proposals could impact the program.
• In recognition of the first anniversary of SECURE 2.0, the Retirement Security Project at Brookings hosted an event to review recent changes to retirement policy and share insights on how to strengthen the system.
• Next year’s Social Security cost-of-living-adjustment could drop to 1.4% in 2025, the lowest increase since 2020, according to advocacy group Senior Citizens League.

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