New Zealand, Australia and the United States
How do people actually spend in retirement?
Less as they get older, on the official statistics, and on different things. In the United States, average household spending falls from $56,267 a year in the late fifties to $36,673 from 75, while the share going on health almost doubles. Australia's last survey of it found $888 a week for a household headed by someone 65 or over and $540 for a lone person of that age. New Zealand does not publish the figures by age at all, which is worth knowing before trusting a number you have seen quoted.
A warning about the numbers you have already seen
The figures most often quoted for what a retirement costs in New Zealand and Australia come from a university research centre and from an industry body. They are careful pieces of work and they are widely used.
They are not used here, because this site only cites legislation, the agencies that administer it, regulators and official statistics, and those two are none of those things. What follows is what the government statisticians have actually published, which is less than you might expect and in one case is nothing at all.
The United States: spending falls, and the shape changes
The Bureau of Labor Statistics runs the Consumer Expenditure Survey, and its analysis of older households found total spending falling steadily with age.
The decline is not evenly spread. Some categories fall a long way, one rises, and the shares tell a different story from the dollars.
Transportation drops from $9,321 to $5,091 between the 55 to 64 group and the 75 and older group. Clothing "went from a high of $1,789 for the 55-64 age group to a low of $683 for the 75-and-older group".
Housing falls in dollars, from $18,006 to $13,375, and rises as a share of the budget, from 32.0 per cent to 36.5 per cent. Both things are true at once, and the second one is why a paid-off house does not remove housing from the problem. Rates, insurance, power and repairs do not retire.
Health care is the category that goes the other way. In dollars it rises modestly, from $4,958 to $5,708. As a share of the budget it nearly doubles: the survey found it "increased with the age of the reference person, from 8.8 percent for the 55-64 age group to 15.6 percent for the 75-and-older group".
And one category collapses, for an obvious reason. Contributions to pensions and Social Security fall from $6,578, which is 11.7 per cent of the budget at 55 to 64, to $800, or 2.2 per cent, at 75 and over. A large part of what looks like a drop in spending is simply the end of saving for retirement.
That article carries a 2016 date, and it is the clearest published analysis of the pattern rather than the newest set of figures. Read it for the shape, not for this year's dollars.
Australia: one survey, and it is nearly a decade old
The Australian Bureau of Statistics published average weekly household expenditure by the age of the reference person in its Household Expenditure Survey.
- 65 years and over: $888 a week
- 75 years and over: $671 a week
- A lone person aged 65 and over: $540 a week
Two things to know before using those. They are 2015-16 figures, released in September 2017. And the survey's own page lists the next release as unknown, so there is no newer official Australian figure to move to and no published date for one.
The same fall with age shows up, and the lone person figure is the one worth noticing: a household of one aged 65 or over was spending about 61 per cent of what a household headed by someone that age spent, not half.
New Zealand: no published figure by age
Stats NZ publishes household expenditure every three years, and the most recent release covers the year ended June 2023. It breaks spending down by region, by expenditure group, by household size, by composition and by tenure.
It does not break it down by the age of the household.
No published figure was found for average household expenditure by age in New Zealand. That is a real gap, and it is the reason the widely quoted New Zealand retirement figures come from a university rather than from the statistician.
What Stats NZ does publish is still useful as context:
- Average weekly household expenditure was $1,598, up 18.4 per cent in the four years from June 2019.
- Housing and household utilities was the largest group at 24.9 per cent, or $398 a week, then food at 18.7 per cent ($300) and transport at 15.7 per cent ($252).
- A one-person household spent $808 a week, and a couple-only household spent $1,611, which is about the national average for all households.
The couple-only figure is the closest published proxy for a retired couple, and it is not one. Couple-only households include people in their twenties and people in their forties whose children have not arrived yet. Treat it as a ceiling on your curiosity rather than an answer.
The health line is worth a glance too: health spending rose 18.5 per cent over those four years, to $50 a week across all households.
What all of this can and cannot tell you
It can tell you the direction. In both countries that publish it by age, spending falls as households get older, and the share going on health rises.
It cannot tell you that your spending will fall. Every one of these surveys compares different households at a single point in time. The 75 year olds in the data are not the 60 year olds seven years later. They are a different generation, with different wages behind them, different housing, and different habits. A survey like this cannot separate getting older from being born earlier, and none of them claim to.
It cannot tell you what a good retirement costs. These are averages of what people did spend, which is a function of what they had. A low average partly measures constraint, not preference.
It cannot tell you about the shape within retirement. People often describe an active first decade, a quieter second, and a more expensive third if care is needed. That story is consistent with the falling averages above and with the rising health share, and it is not something the published figures separate out.
What this guide does not tell you
It does not give you a number to plan on. The two most quoted numbers in this part of the world are deliberately not here, for the reason given at the top.
It does not cover aged residential care, which is where the largest late-life costs sit and which has its own means-tested rules in each country.
It does not cover how spending is taxed, or how inflation treats retired households differently from working ones, which it does, because the things they buy are not the same basket.
And it does not answer how long a given amount will last, which depends on much more than the rate you spend it at.
Sources
What no source publishes
Looked for and not found, so this guide gives no figure for it.
- Average household spending by age in New Zealand