If you’re planning for retirement, one of the most important questions to ask is:“What are the biggest expenses in retirement?”Understanding where your money will go helps you budget better, plan your super withdrawals, and avoid financial surprises.Even with a solid super balance or pension income, knowing your likely costs is the key to staying comfortable and confident in retirement.
Let’s break down the main expenses most Australians face and how to manage them wisely.
Why Knowing Your Retirement Expenses Matters
When you stop working, your income changes but your bills don’t stop.
By understanding your biggest expenses in retirement, you can:
- Set a realistic retirement income target
- Avoid overspending early on
- Make your super and savings last longer
- Reduce financial stress and enjoy more freedom
According to the Association of Superannuation Funds of Australia (ASFA), a “comfortable retirement” in 2025 costs around:
Can I Live Off Super Alone After Retirement?
- $53,289 per year for singles
- $74,634 per year for couples
But where does that money actually go? Let’s find out.
What Are the Biggest Expenses in Retirement?
While everyone’s lifestyle is different, most retirees face similar major expenses. Here are the big ones and how to plan for them.
1. Housing and Utilities
Even if you own your home, housing remains one of the largest retirement expenses.
Costs include:
- Rates and insurance
- Maintenance and repairs
- Electricity, gas, and water bills
- Strata fees or body corporate costs (if applicable)
If you’re still paying rent or a mortgage, this becomes an even bigger expense.
Tip:
Consider downsizing or moving to a more affordable area to reduce costs and free up equity.
2. Healthcare and Insurance
Healthcare is consistently one of the biggest and fastest-growing costs in retirement.
As we age, medical needs increase, and so do expenses like:
- Private health insurance premiums
- Prescription medications
- Dental and optical care
- Out-of-pocket specialist visits
- Aged care and home assistance
Tip:
Review your private health insurance regularly. Many retirees save by adjusting cover levels or removing unnecessary extras.
3. Food and Groceries
While food costs may seem manageable, they’re one of the most consistent expenses month to month.
According to ASFA data, a couple in retirement spends around $160–$200 per week on groceries and dining out.
Tip:
Plan meals, use loyalty programs, and shop in bulk when possible to manage costs without compromising quality.
4. Transport and Travel
Even if you no longer commute for work, transport costs remain significant.
Common expenses include:
- Fuel, registration, and maintenance
- Public transport or taxi services
- Domestic and international travel
Many retirees also plan to travel early in retirement when they’re healthier and more active which can temporarily increase costs.
Tip:
If you’re planning big trips, set aside a separate travel fund so it doesn’t eat into your everyday income.
5. Leisure, Entertainment, and Hobbies
Retirement is meant to be enjoyed but recreation often becomes a major budget category.
Expenses may include:
- Holidays and weekend getaways
- Club memberships and hobbies
- Dining out, gifts, and entertainment
- Sports, classes, or community activities
Tip:
Budget for fun! Include a “lifestyle allowance” in your retirement plan so you can enjoy these experiences guilt-free.
6. Insurance and Financial Services
Retirees often underestimate how much insurance and financial management cost each year.
This can include:
- Home, car, and contents insurance
- Private health cover
- Financial advice or accounting services
- Life insurance (if applicable)
Tip:
Review policies annually you might find cheaper alternatives without sacrificing coverage.
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7. Aged Care and Health Support
Later in life, the biggest single cost can be aged care or home assistance.
Residential aged care, nursing services, and home modifications can become major financial commitments.
Tip:
It’s worth getting early advice on aged care planning, as costs vary widely depending on your health, location, and care needs.
Smaller But Important Retirement Expenses
While the major categories above make up most of your budget, don’t forget about the smaller essentials:
- Clothing and personal care
- Internet and phone bills
- Gifts and charitable donations
- Home upgrades or technology purchases
These add up over time and should be included in your planning.
How to Manage the Biggest Expenses in Retirement
Here are some smart ways to keep your retirement budget balanced:
- Create a Detailed Spending Plan
Use your current spending as a baseline, then adjust for retirement lifestyle changes. - Consider an Account-Based Pension
Turning your super into a regular income stream helps you budget consistently while keeping your money invested. - Use Concession Cards
Pensioner Concession Cards and Seniors Cards offer discounts on energy, transport, and medical services. - Monitor Inflation
Costs rise over time — review your plan annually to stay ahead of price increases. - Get Professional Advice
A licensed financial adviser can help you forecast costs, optimise super, and plan for longevity.
FAQs:
1. What’s the biggest single expense for most retirees?
Housing and healthcare top the list especially for those who rent or need ongoing medical care.
2. How much do I need for a comfortable retirement?
According to ASFA, around $53,000 per year for singles and $74,000 for couples (homeowners) supports a comfortable lifestyle in 2025.
3. Will my expenses drop once I retire?
Some do (like commuting or work-related costs), but others such as healthcare, travel, and leisure often rise.
4. How can I make my super last longer?
Withdraw strategically, keep part of your money invested, and review spending yearly.
5. What happens if my costs exceed my income?
You may be eligible for the Age Pension or other support to supplement your retirement income.
What Retirement Income Do I Need?
So, what are the biggest expenses in retirement?For most Australians, it’s a mix of housing, healthcare, food, and lifestyle costs all of which can add up quickly.The key is planning ahead: knowing your spending, budgeting carefully, and using your super and pension income wisely.
At Wealthlab, we help retirees build personalised financial plans that make their money last so they can enjoy the retirement they’ve worked hard for.
Book a free consultation today to learn how to manage your retirement expenses and achieve lasting financial confidence.
Learn More About Retirement & Superannuation
https://moneysmart.gov.au/retirement-income-sources
https://www.superannuation.asn.au/consumers/retirement-standard/
https://www.aihw.gov.au/reports/health-welfare-expenditure/health-expenditure-australia
https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super