How Much You’ll Spend in Your Retirement Years, by State

The older Americans get after their peak earning years, the less they tend to spend. How much less? The latest DepositAccounts study finds consumers 65 and older spend an average of 20.8% less annually than all consumers — $57,818 versus $72,967.

That amount varies significantly by state, too. We analyzed various data sources to delve into these differences and look at how much consumers spend in their retirement years on housing, food, transportation, Medicare, entertainment and personal care across the U.S.

Here’s what we found.

Key findings

• Older Americans generally spend less. Consumers 65 and older spend an average of 20.8% less annually than all consumers — $57,818 versus $72,967. That may not be by choice, though, as the average annual income for those 65 and older plummets to $60,359 after being $105,498 among 55-to-64-year-olds.
• Older Americans prioritize spending differently. Consumers 65 and older spend an average of 28.9% more annually on health care than all consumers — $7,540 versus $5,850. However, older adults spend 33.5% and 21.8% less, respectively, on transportation and food. This spending can impact where they choose to retire. The average retirement account savings for those ages 65 to 74 is $609,230.
• Average expenditures for those 65 and older have significantly increased in the past decade. Overall spending increased by 16.7% between 2017 and 2022 and 43.1% between 2012 and 2022. Between 2012 and 2022, there were increases of 44.4% in food, 32.3% in entertainment and 25.0% in transportation expenses.
• Hawaii is the most expensive state in which to spend your retirement years, with an annual cost of $56,757. While the Aloha State tops the list as the most expensive state, California and New Jersey aren’t far behind at $56,597 and $55,660, respectively. These states finished in the same order in our 2021 version of this study, though Hawaii had the lowest spending increase among older adults over that period (8.1%).
• The least expensive states in which to spend your retirement years are in the South. West Virginia, Arkansas and Mississippi wrap up our list. In these states together, annual costs among older adults in key spending categories average less than $34,000. The average cost for retirees in West Virginia is $33,388 — 41.2% (or $23,369) less than in Hawaii. These three states also finished at the bottom in 2021, though West Virginia and Arkansas swapped spots.

Older Americans generally spend less

Older Americans tend to spend less than the overall population (and their younger counterparts). Consumers 65 and older spend an average of 20.8% less annually than all consumers — $57,818 versus $72,967. And the older they get, the less they spend.

While those ages 65 to 74 spend an average of $60,844 annually, Americans 75 and older spend an average of $53,481 yearly.

Why the slowdown in spending in the golden years? In some cases, it may be out of necessity, as income often takes a nosedive later in life. Average annual income drops from $105,498 among 55-to-64-year-olds to $60,359 among those 65 and older. Breaking that down further, it drops from an average of $68,059 among those 65 to 74 to an average of $49,392 among those 75 and older.

Other studies have also analyzed spending among older adults. For example, a 2022 Rand Corp. analysis found spending declines for those older than 65 at an annual rate of 1.7% for single households and 2.4% for coupled households. Its researchers believe this is likely related to declining health, impacting large expenditures like vacations.

DepositAccounts founder Ken Tumin says many older adults rely on fixed income, like pensions, which may not keep up with inflation. Over time, this can limit their ability to increase spending. Also, their priorities often change.

“In general, older adults tend to be more conservative in their spending habits and prioritize saving over nonessential purchases,” he says.

Older Americans prioritize spending differently

How Americans spend their dollars changes significantly with age, too.

For example, the 65-and-older set spends an average of 28.9% more on health care annually than all consumers — $7,540 versus $5,850. And that amount grows with age. Those 65 to 74 spend an average of $7,422 annually on health care, while those 75 and older spend an average of $7,708.

Older Americans spend less, however, in the other categories we analyzed using U.S. Bureau of Labor Statistics (BLS) data: food, transportation, entertainment and personal care. (Note: We track health care differently at the state level.) Most significantly, adults 65 and older spend 33.5% less on transportation than all consumers and 21.8% less on food.

Spending decreases outside health care may be part of consumers’ retirement plans.

Depending on how and where consumers choose to retire, they may have to cut corners when health care costs creep up. The average retirement savings account for Americans ages 65 to 74 is $609,230, but a 2023 LendingTree study found it takes more than $1 million to retire with an average lifestyle in 40% of the 384 U.S. metros. And those savings dwindle over the years. The average retirement savings account for those 75 and older dips to $462,410.

“Health care expenses tend to increase with age,” Tumin says. “In addition, health care expenses have tended to rise faster than inflation. These concerns can cause older Americans to spend less on discretionary expenses and put off retirement.”

Average expenditures for those 65 and older have significantly increased in past decade

While older Americans generally spend less than their younger counterparts, those 65 and older have been spending significantly more in recent years. In fact, between 2012 and 2022, overall spending for consumers 65 and older increased by 43.1%.

Why? Inflation is a driving factor. According to the Consumer Price Index (CPI) inflation calculator, $1.00 in January 2012 would have the same buying power as $1.31 in December 2022.

“Inflation erodes the purchasing power of money over time,” Tumin says. “For retirees on fixed incomes, inflation can force them to reduce spending. Worries about high inflation can pressure older Americans to delay retirement.”

Among the categories we analyzed, the biggest increase in non-health care spending for adults 65 and older can be seen in food, with a whopping 44.4% rise between 2012 and 2022. And it’s no wonder, as food prices have been escalating rapidly in recent years — 11% between 2021 and 2022 alone, according to the U.S. Government Accountability Office (GAO). GAO says global disruptions to the food supply chain contributed to rising prices.

Hawaii is the most expensive state in which to spend your retirement years

Dreaming of palm trees and sandy beaches? Be prepared to pay if you want to retire in Hawaii. The Aloha State is the most expensive for retirees, requiring $56,757 a year to retire there.

Here are the categories we analyzed to calculate monthly and annual costs by state:

• Housing
• Food
• Transportation
• Medicare (Part B and Part C)
• Entertainment
• Personal care

Hawaii is followed by California ($56,597 a year) and New Jersey ($55,660 a year). Interestingly, these three states also ranked as the most expensive for retirement in our 2021 study, in the same order.

Why are these locales so pricey? High demand (who doesn’t love the ocean?) and limited supply are likely factors. They drive up housing prices and the cost of other goods and services.

Will they continue to stay the most expensive? Each ranks close to the bottom among the states with the biggest change in annual costs since our 2021 study, analyzing the same categories.

Hawaii had the lowest spending increase among older adults over that period (8.1%). New York was second-lowest at 8.4%, New Jersey was third-lowest at 9.2%, Massachusetts was seventh-lowest at 10.3% and California was 11th-lowest at 10.8%.

The least expensive states in which to spend your retirement years are in the South

If you’re looking for the most affordable places to retire, you may want to look to the South.

Southern states dominate, with West Virginia the least expensive state in which to spend your retirement years. In the Mountain State, it takes $33,388 — 41.2% (or $23,369) less than in Hawaii (the most expensive state).

West Virginia is followed by Arkansas ($33,546) and Mississippi ($34,566). Alabama and Indiana (repping the Midwest) round out the bottom five, at $35,044 and $35,222, respectively.

How have things changed since our 2021 study? Mississippi saw the fourth-highest rise in annual costs between the 2021 and 2024 versions, at 14.1%. Indiana and Alabama saw the seventh-biggest jumps, both at 13.5%. Arkansas and West Virginia were 21st and 28th, respectively.

The same states also ranked as the least expensive for retirement in our 2021 study, though Arkansas required slightly less than West Virginia — $29,736 versus $29,763. They were followed by Mississippi ($30,292), Alabama ($30,884) and Indiana ($31,029).

Full data

4 budgeting tips in retirement

These four tips can help you stay on track financially to live your best life in retirement.

• Start saving early: It’s never too early to start saving for retirement. Begin putting away money early in your career so it can grow with interest. Estimate your monthly retirement income needs to set a savings target. If you’re nearing retirement and aren’t close to your goal, you may have to play catch-up with your savings.
• Keep track to stay on track: Start by creating a detailed retirement budget that lists all sources of income and expenses. Then, track all expenses to ensure you aren't over your budget.
• Eliminate debt: Plan to minimize or eliminate debt before and during retirement. That may include strategies such as debt consolidation or meeting with a credit counselor to form a repayment plan.
• Invest wisely: Tumin cautions that retirees shouldn’t invest too conservatively. You want your investments to generate a return above inflation.

Methodology

DepositAccounts researchers utilized data from the U.S. Bureau of Labor Statistics (BLS), U.S. Bureau of Economic Analysis (BEA), U.S. Census Bureau, Centers for Medicare & Medicaid Services (CMS) and ValuePenguin to estimate various costs of retirement in every state.

We first used the BLS 2022 Consumer Expenditure Survey to find out how much people 65 and older spend yearly, on average, on:

• Food
• Transportation (vehicle purchases, maintenance and repairs, vehicle insurance, etc.)
• Entertainment
• Personal care

We then multiplied those figures by BEA 2022 regional price parities to differentiate by state.

Next, we utilized the Census Bureau 2022 American Community Survey with five-year estimates to get median housing costs for those with a mortgage. This figure includes mortgage payments, real estate taxes and utilities.

Finally, we gathered the average cost in 2024 of Medicare Part B and Part C — also known as a Medicare Advantage plan — across each state where available. (Alaska doesn’t offer Part C.) We used the standard Part B monthly premium for 2024, as reported by CMS, and Part C data compiled by ValuePenguin.

These monthly totals were added and multiplied by 12 for the annual cost.