Retirement at 65 vs. 75: 3 Budget Lines That Usually Shift (Even If Your Income Doesn't)

Retirement spending isn't set in stone. While many people expect their budgets to shrink once they stop working, the reality is more nuanced. For most retirees, certain expenses shift dramatically between ages 65 and 75 — not because of unexpected crises, but simply because priorities and lifestyles evolve.

Understanding where these shifts happen can help you plan more realistically. Here we break down the three budget categories that consistently change as retirees age and what typically happens in each area.

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What Retirees Actually Spend

According to 2024 data from the Federal Reserve Bank of St. Louis (the latest available), the average American 65 and older spends about $61,000 annually. By 75, that drops to roughly $56,000 — but the breakdown matters more than the total.

Taking only the baseline annual expenditures, those ages 65 and up tend to spend about $5,500 more annually. Most major expenses remain stable, though transportation and other/miscellaneous spending show a noticeable decline.

Note that the first set of expenditures is for those ages 65 and up, which includes the older age group. This suggests that spending does decline as people get older, but it doesn’t specify precise differences between those in their 60s vs. those in their 70s.

Where the Real Shifts Happen

According to Steve Sexton, CEO of Sexton Advisory Group, three main budget lines shift from age 65 to age 75: discretionary spending, healthcare and housing.

1. Discretionary Spending

This is where the fun money goes — travel, hobbies, entertainment, even non-essential home projects. Combined, entertainment and other expenses make up 22% of spending at 65 but drop to 21% at 75.

“I often tell clients not to assume their spending will automatically drop just because they stopped working,” said Sexton. “For some people, those first few years of retirement can actually be fairly expensive.”

Sexton noted that discretionary spending starts to slow down once clients turn 75. A big part of this is that newer retirees are still living similarly to how they did while working, just with more free time. As they get older, their priorities shift and they tend to spend less on things like travel (and transportation) or entertainment.

2. Healthcare 

Healthcare accounts for anywhere from 12% to 14% of the average retiree’s annual budget, but even this can change over time. Prescriptions and supplemental insurance start adding up as you age, and that's before considering long-term care.

Here's what long-term care insurance alone can cost, according to Always Best Care Senior Services:

• Age 60: $1,200–$3,700 annually

• Age 70: $2,075–$6,600 annually

• Age 75: $3,600–$12,375 annually

“Health is usually the biggest wildcard,” said Sexton. “Medicare helps, but it certainly doesn't make healthcare free, and medical expenses can become more significant as people age.”

3. Housing 

Housing costs can go either way. As per the data, they take up either 36% (65+) or 39% (75+) of the average annual household budget. Actual costs vary based on circumstances, and whether the homeowner has paid off their mortgage prior to retiring.

“Someone who has paid off their mortgage and plans to age in place may have relatively predictable housing costs, but they still need to account for property taxes, insurance, maintenance and potentially making the home safer or more accessible as they get older,” said Sexton.

The Bottom Line

Retirement budgets aren't set-it-and-forget-it. Your spending at 65 won't match your spending at 75, and that's okay as long as you've accounted for it. The key is anticipating where those shifts happen: expecting discretionary costs to stay high early on, knowing healthcare will likely climb and building in cushion for housing surprises.

The retirees who sleep soundest aren't those with the biggest nest eggs — they're the ones who planned for change.

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice. 

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