05/06/2026
Budgets are tight for most Americans, but older adults entering their retirement years may feel the squeeze more intensely as prices rise on a fixed income. It often falls to the next generation to fill in the gaps when retirement income doesn’t cover the bare necessities. If this is within your means, hooray–but retirees’ adult children are also struggling to cope with rising costs and may not be able to support aging parents the way previous generations could.
SOCIAL SECURITY INCOME
Social Security is meant to replace about 40% of pre-retirement income, and it’s best to save for retirement in other ways like a 401(k) or IRA. The average benefit for a 65-year-old receiving Social Security is $1658 per month according to the Motley Fool.
If this is all the income you have to work with, making $1600 stretch to cover all necessary expenses is tight, but do-able in more affordable cities. Let’s jump into the most significant expenses for retirees and options to reduce costs.
HEALTHCARE SPENDING
Consider the costs of health insurance, out-of-pocket costs, medications, mobility aids, and any other health needs.
Once you start receiving social security benefits, Medicare provides lower-cost health coverage. However, Medicare doesn’t have an out-of-pocket maximum, so you may want to look into savings programs like Medicare Advantage or Medigap to help further reduce costs, especially if there are chronic health issues at play.
For generic prescription drugs, you might be able to save money by using an online pharmacy like Cost Plus Drugs–however, purchases from Cost Plus won’t count against the deductible for Medicare Part D.
If you have non-Medicare healthcare coverage, it's worth taking a look at your plan to comparison shop and ensure you’re getting the best coverage for your money.
FOOD SPENDING
Grocery prices are sharply rising, and the Bureau of Labor Statistics reports that a typical American over 65 spends around $7,700 on food and beverages in a year. This includes around $5,000 on groceries and $2,700 on eating out. This is roughly $640 per month, which is of course an average. Cities with a higher cost of living will require more per month, while lower cost cities will have more affordable grocery prices.
As we age, we need to pay closer attention to our dietary needs, increasing calcium and fiber especially. A heart-healthy diet requires whole grains and vegetables that offer important nutrients. Reducing meat (especially red meat) and replacing it with fiber-rich lentils or beans can provide protein and save money.
In food deserts (places without affordable access to fresh, more nutritious foods), it’s easier to purchase convenience foods than whole foods–but those nutritious foods are important for longevity and lasting health. A farmer’s market can offer healthier, locally-raised meat, dairy, and eggs, as well as lower cost vegetables and fruits.
If there isn’t a farmer’s market near you, gardening is a great way to reduce food costs while building in consistent exercise and fresh air. Start small, growing tomatoes, jalapenos, and cilantro to create a homemade salsa, or bell peppers and tomatoes to cook into a tasty chili base. If you can find a few ways to enjoy vegetables, it’ll make taking care of yourself more fun (and delicious).
LIVING EXPENSES
The average cost of living expenses is around $21,000, according to the Bureau of Labor Statistics–assuming a mortgage. If your home is already paid off, you’ll likely need less. Likewise, if you’re renting, you may need to plan for increases in your housing costs as inflation grows. Owning a home also includes any property taxes, mortgage interest, home repairs, and home insurance costs.
Living in an assisted living facility is more expensive, with a median cost of $6,200 per month according to US News. If 24/7 care and observation isn’t necessary, it can be more affordable to hire a nurse or home health aide instead of moving into assisted living.
Long-term care insurance can help mitigate the costs of assisted living or nursing homes. If you don’t already have a policy, speaking with a qualified financial planner can help you find and secure an appropriate plan.
