When planning for retirement, one of the most important questions Australians ask is:What are the biggest expenses in retirement?Understanding your retirement living costs helps you plan how much superannuation you’ll need, how long your money will last, and whether your income will cover a comfortable retirement lifestyle.
According to the Association of Superannuation Funds of Australia (ASFA), a comfortable retirement in 2025 costs about $53,289 a year for singles and $74,634 for couples (for homeowners).
But what does that money actually go towards?Let’s break down the major expenses in retirement, how they change over time, and what you can do to plan for them.
Why It’s Important to Understand Your Retirement Expenses
When you retire, your income changes but your expenses don’t stop.
Planning ahead helps you:
- Work out your retirement income needs
- Build a realistic retirement budget
- Manage inflation and unexpected costs
- Avoid running out of money too soon
The biggest challenge many retirees face isn’t saving enough it’s underestimating how much they’ll spend after they stop working.
What Are the Biggest Expenses in Retirement in Australia?
While everyone’s retirement lifestyle is different, most Australians share the same key costs once they leave the workforce.Here’s what typically takes up the biggest share of your retirement income.
1. Housing and Utilities
Housing remains one of the largest retirement expenses in Australia whether you own your home or rent.
Common costs include:
- Council rates and home insurance
- Electricity, gas, and water bills
- Maintenance, repairs, and gardening
- Body corporate or strata fees
For retirees who still pay rent or mortgage, this can easily take up 30% or more of total expenses.
Smart tip: Downsizing to a smaller home or moving to a regional area can help lower costs and release equity for retirement income.
2. Healthcare and Medical Costs
Healthcare is consistently one of the biggest and fastest-growing expenses for retirees.As Australians live longer, more of your budget will go toward health-related spending.
Typical costs include:
- Private health insurance premiums
- Prescription medications
- Dental, optical, and hearing services
- Physiotherapy and specialist visits
- Home care or residential aged care support
Even with Medicare, out-of-pocket costs can rise with age, especially for chronic conditions or surgeries.
Smart tip: Review your health insurance every 12 months to ensure you’re not overpaying for unnecessary extras.
Can I Live Off Super Alone After Retirement?
3. Food and Groceries
Food is a regular and unavoidable part of your retirement budget.
On average, retirees spend between $8,000–$10,000 per year on groceries, dining out, and daily essentials.
Costs depend on:
- Lifestyle choices (home-cooked meals vs. dining out)
- Family size
- Location and access to affordable supermarkets
Smart tip: Plan weekly meals, buy seasonal produce, and use loyalty or seniors discount programs to stretch your budget.
4. Transport and Travel
Even after you stop working, you’ll still spend money getting around and many retirees plan to travel more in their early years of retirement.
Transport-related expenses include:
- Fuel and car maintenance
- Vehicle registration and insurance
- Public transport costs
- Domestic or international travel
A couple who travels regularly could spend $10,000–$15,000 annually on holidays alone.
Smart tip: Factor travel into your retirement budget early especially for your “active years” between 60 and 75.
5. Leisure, Hobbies, and Entertainment
Retirement gives you the time to enjoy hobbies, but it can also lead to higher spending.
Common lifestyle expenses include:
- Social outings and entertainment
- Club memberships or classes
- Sports, hobbies, and leisure activities
- Gifts, birthdays, and holidays with family
Smart tip: Allocate a portion of your retirement income (around 10–15%) for lifestyle spending. It keeps your budget realistic and your retirement enjoyable.
6. Insurance and Financial Services
Even in retirement, insurance and professional advice remain essential for protecting your wealth.
Typical costs include:
- Home, car, and contents insurance
- Private health insurance
- Financial advice or accounting fees
Smart tip: Bundle insurance policies or increase your excess to reduce premiums without losing critical coverage.
7. Aged Care and Home Support
This is one of the biggest long-term retirement costs that many Australians underestimate.As you age, you may need help with home care, assisted living, or nursing services.According to government data, residential aged care can cost $60,000+ per year, depending on care level and location.
Smart tip: Explore aged care planning and government subsidies early the rules are complex, and proactive planning can save you thousands.
Average Retirement Expenses in Australia
Here’s a summary of typical annual costs based on ASFA’s 2025 Retirement Standard for homeowners:
| Category | Single (Annual) | Couple (Annual) |
|---|---|---|
| Housing & Utilities | $12,000 | $15,000 |
| Food & Groceries | $9,000 | $12,000 |
| Healthcare & Insurance | $6,000 | $8,000 |
| Transport & Travel | $8,000 | $11,000 |
| Leisure & Lifestyle | $6,500 | $9,500 |
| Other (Clothing, Communication, etc.) | $4,000 | $5,000 |
| Total (Comfortable) | $53,289 | $74,634 |
Source: ASFA Retirement Standard, March Quarter 2025
How to Manage the Biggest Expenses in Retirement
Once you know where your money will go, you can plan how to manage it.Here are practical steps to stay financially secure:
- Create a realistic retirement budget
Track monthly expenses and update it annually to reflect inflation and lifestyle changes. - Turn your super into income
Convert your superannuation into an account-based pension to generate tax-free income after age 60. - Diversify your income sources
Combine super withdrawals, Age Pension, and investments to balance cash flow. - Use government concessions
Pensioner and Seniors Cards can reduce costs on energy, public transport, and healthcare. - Review your plan yearly
Costs rise over time adjust your spending and income strategy regularly with professional guidance.
FAQs: What Are the Biggest Expenses in Retirement?
1. What’s the largest expense in retirement?
Housing and healthcare typically make up the biggest portion of retirement expenses in Australia.
2. How much money do retirees need each year?
For a comfortable lifestyle in 2025, ASFA estimates $53,000 per year for singles and $74,000 for couples (homeowners).
3. How do I reduce my retirement expenses?
Downsize your home, manage healthcare proactively, and use concessions or discounts available to retirees.
4. Do retirement expenses go down over time?
Some costs (like travel) may decrease with age, but healthcare and support costs often rise later in life.
5. How can I make sure my money lasts through retirement?
Use a sustainable withdrawal strategy like the 4% rule and seek financial advice to balance income, investment, and longevity.
What Retirement Income Do I Need?
So, what are the biggest expenses in retirement?
For most Australians, they include housing, healthcare, food, and lifestyle costs but careful planning can make them manageable.By building a strong retirement income plan, tracking your expenses, and optimising your superannuation and pension benefits, you can enjoy a comfortable, secure retirement without financial stress.
At Wealthlab, we help Australians plan smarter from forecasting retirement expenses to building strategies that make your super last longer.
Book a free consultation today to take control of your retirement costs and live with 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