A 68-Year-Old’s $5K Monthly Budget Reveals Real Retirement Costs
Budgeting on a fixed income can be challenging, but millions of retirees do it successfully every year. To help you with retirement planning, we spoke with Diane P., a 68-year-old retired teacher, who shared her actual monthly budget and strategies for living comfortably in her golden years.
From housing and healthcare to entertainment and savings, this breakdown offers real-world insight into managing expenses after leaving the workforce, plus tips on how to set a retirement budget without sacrificing your lifestyle.
Be Aware: What Waiting Until 35 To Start Saving for Retirement Really Costs You
Check Out: Start Growing Your Net Worth With Smarter Tracking
Fixed Income: $2,850
"Everyone talks about saving for retirement, but nobody tells you exactly what it costs to live once you get here," Diane said. She then broke down the specific numbers.
"I get $2,850 in Social Security benefits each month, plus $2,200 from my teacher's pension. I also withdraw about $1,500 monthly from my retirement accounts, which still have about $580,000 in them. I try to stick to the 4% rule for withdrawals to make sure my money lasts," she explained.
Housing: $1,650
Diane loves her small house and plans to live in it for a long time to come.
"I paid off my house last year, thank goodness! But property taxes, insurance and utilities still add up. Michigan winters aren't cheap to heat through," she said.
Healthcare: $875
For Diane, healthcare is one of her biggest (and most important) expenses.
"Medicare Part B premiums take $174.70 right off the top of my Social Security," she explained. "Then there's my supplemental insurance, prescriptions and dental care -- nothing is truly 'free' in retirement!"
Consider This: Enter for a Chance To Win $500 in MoneyLion's Summer Break Giveaway (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
Groceries: $600
Diane said she didn't love cooking when she was younger, but now it's a passion.
"I've gotten pretty creative with meal planning. My friends and I started a dinner club where we rotate cooking for each other once a week," she said. "It saves money and keeps us social!"
Transportation: $200
Diane's car is paid off, but she still spends a chunk of change on it every month.
"My car is paid off, but there's still insurance, gas and maintenance," she said. "I try to combine errands to save on gas -- prices are crazy these days!"
Entertainment and Hobbies: $400
In her own words, Diane refuses to sit at home all day.
"Between my yoga classes, book club memberships (I'm in two and they buy the books for us!) and occasional movies with friends, staying active is worth every penny," she said.
Travel: $300
Diane is willing to travel to see the people who matter -- and she's even saving up for a jaunt to Costa Rica.
"I set aside money each month for visits to see my grandkids in Colorado. Having a dedicated travel fund means I never have to miss the important moments," she said.
Emergency Fund: $200
Diane learned to feed her emergency fund, no matter what.
"After my water heater died last winter, I learned the hard way about keeping emergency savings. Now I put away a little each month, just in case," she said.
Miscellaneous: $400
Diane also keeps a smaller amount of money set aside for things she might not necessarily think of regularly.
"There's always something -- haircuts, gifts, clothes, those little things you don't think about until you need them," she said.
Add It All Up
Diane explained that her monthly expenses run a bit under $5,000, though they do vary some months. However, this usually gives her some money left over. "I keep that extra as a buffer or add it to my emergency fund," she said.
And for those looking to retire, consider this advice from Diane. "Track everything for at least three months before retiring," Diane advised. "And add 20% to whatever you think you'll need -- there are always surprise expenses!"
To help Americans navigate the added cost of summer, MoneyLion is giving away $1,000 every day through July 4. Enter the Summer Break Giveaway here (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion:
