The cost of living in retirement in Australia is $54,240 per year for a single homeowner living comfortably, and $77,375 per year for a couple, according to the ASFA Retirement Standard (February 2026). That works out to approximately $4,520 per month for a single person or $6,448 per month for a couple. For renters, add $15,000 to $20,000 per year depending on location.
But these headline figures mask two things most retirees do not plan for: how dramatically costs shift across a 25 to 30 year retirement, and the categories that are consistently and significantly underestimated, particularly healthcare in your 70s and aged care in your 80s.
This guide breaks down every major retirement cost category with real 2026 figures, explains how spending changes across the three stages of retirement, and identifies the three expenses that derail the most retirement plans.
The Cost of Living in Retirement: 2026 ASFA Benchmarks
The ASFA Retirement Standard is the most widely cited benchmark for Australian retirement living costs, updated quarterly. The February 2026 figures for homeowners are:
| Lifestyle standard | Single homeowner | Couple homeowners | Per week (couple) |
|---|---|---|---|
| Comfortable retirement | $54,240 per year | $77,375 per year | ~$1,488 per week |
| Modest retirement | $35,199 per year | $50,866 per year | ~$979 per week |
ASFA defines “comfortable” as covering private health insurance, a reasonable car, domestic and some international travel, occasional dining out and household bills. “Modest” covers basic needs with little discretionary spending.
Both figures assume you own your home outright. Renters need to add approximately $15,000 to $20,000 per year depending on location, making a comfortable retirement for a single renter around $69,000 to $74,000 per year.
Average cost of retirement per month: Approximately $4,520 per month for a single homeowner living comfortably, or $1,068 per week. For a couple, approximately $6,448 per month or $1,488 per week.
These are national averages. Your actual costs depend heavily on location, health, lifestyle, and whether you have a partner. What they do not show is how costs shift across the retirement journey.
How Retirement Living Costs Change Over Time: The Three Stages
One of the most important and most overlooked insights in retirement planning is that expenses are not flat. They follow a characteristic curve across three stages:
| Stage | Typical ages | Spending pattern | Key cost drivers | Relative to ASFA benchmark |
|---|---|---|---|---|
| “Go-Go” years | 60 to 74 | High active lifestyle, travel-heavy | Travel, leisure, dining, home upgrades, helping adult children | 110% to 130% of benchmark |
| “Slow-Go” years | 75 to 84 | Moderate: less travel, more healthcare | Healthcare, medications, home modifications, reduced travel | 85% to 105% of benchmark |
| “No-Go” years | 85 and over | Lower lifestyle spend but high care costs | Aged care fees, home care, medical, reduced discretionary | Highly variable, care costs can exceed $80,000 per year |
The most consistently underbudgeted stage is the “No-Go” years. Retirees plan well for the active first decade and reasonably well for the middle decade, but aged care costs in the 80s regularly catch families off guard. Lifestyle costs taper as activity slows, but care costs often spike sharply in the same period.
Phil and Dan covered the spending wave pattern in retirement and what it means for drawdown strategy in Episode 19 of the Wealthlab Podcast. Watch Episode 19 on YouTube.
The Eight Biggest Retirement Cost Categories in Australia
1. Housing: The Largest Single Cost
Housing is the biggest single expense in retirement whether you own or rent.
For homeowners with no mortgage:
| Housing cost | Annual range (single) | Annual range (couple) |
|---|---|---|
| Council rates | $1,500 to $3,000 | $1,500 to $3,000 |
| Home and contents insurance | $1,500 to $3,500 | $1,500 to $3,500 |
| Maintenance and repairs | $2,000 to $6,000 | $2,000 to $6,000 |
| Utilities (electricity, gas, water) | $3,000 to $5,000 | $4,000 to $6,500 |
| Strata or body corporate if applicable | $2,000 to $8,000 | $2,000 to $8,000 |
| Total with no mortgage | $10,000 to $25,500 | $11,000 to $27,000 |
For renters: Median rents in Australian capital cities in 2026 range from approximately $22,000 per year in Adelaide to $35,000 or more per year in Sydney for a modest two-bedroom unit. This adds $15,000 to $25,000 per year compared with owning outright, which is why home ownership status is one of the most significant variables in retirement income planning.
Maintenance costs are particularly underestimated by homeowners. Older homes require more upkeep, and a single roof replacement, driveway reseal, or bathroom renovation can cost $10,000 to $30,000. These costs arrive with regularity over a 25-year retirement even if they are not annual line items.
2. Healthcare and Medical: The Fastest-Growing Expense
Healthcare costs grow most rapidly through retirement and are most frequently underestimated. Medicare does not cover all medical expenses, and out-of-pocket costs increase significantly from the 70s onwards.
| Healthcare cost | Annual range ages 60 to 74 | Annual range ages 75 to 84 | Annual range ages 85 and over |
|---|---|---|---|
| Private health insurance (hospital and extras) | $3,500 to $6,500 | $4,500 to $8,000 | $5,000 to $9,000 |
| Out-of-pocket GP and specialist visits | $500 to $2,000 | $1,000 to $4,000 | $2,000 to $6,000 |
| Dental (fillings, extractions, dentures, implants) | $1,000 to $3,000 | $2,000 to $5,000 | $1,000 to $4,000 |
| Optical (glasses, contact lenses) | $300 to $800 | $400 to $1,000 | $400 to $1,200 |
| Hearing aids (amortised annually) | $200 to $600 | $800 to $2,000 | $1,000 to $3,000 |
| Medications (PBS gap and non-PBS) | $500 to $2,000 | $1,000 to $4,000 | $2,000 to $6,000 |
| Total healthcare per person | $6,000 to $15,000 | $9,700 to $24,000 | $11,400 to $29,200 |
The AIHW Health Expenditure Australia report consistently shows that per-capita health spending roughly doubles between ages 65 to 74 and 85 and over. A retiree who budgets $8,000 per year for healthcare at 65 should be planning for $15,000 to $20,000 per year at 85.
Dental is one of the most consistently underestimated healthcare costs. Medicare does not cover routine dental for adults, and a single dental implant can cost $3,000 to $6,000. Budgeting $1,500 to $3,000 per year per person from age 65 is realistic for most Australians.
Scott covered the healthcare cost reality in Episode 19 of the Wealthlab Podcast, including the data point that 34% of total retirement savings are typically consumed by healthcare, and that the final 24 months of life consume 50% to 80% of total lifetime healthcare spending. Watch Episode 19 here.
3. Food and Groceries
Food costs are relatively stable across retirement stages but tend to be underestimated for couples who enjoy dining out regularly.
Based on ABS Household Expenditure Survey data and ASFA’s breakdown:
- Singles: $9,000 to $14,000 per year (groceries plus occasional dining out)
- Couples: $13,000 to $20,000 per year (groceries plus regular dining out)
Food costs at the higher end reflect dining out two to three times per week, which is common in the active early years of retirement when social engagement is high. Food costs typically decline in the Slow-Go and No-Go years.
4. Transport
Transport costs evolve significantly across retirement. In the Go-Go years, car ownership and road trips dominate. In later years, car use typically reduces but alternative transport costs increase.
- Car running costs (fuel, registration, insurance, servicing): $5,000 to $10,000 per year for one car; $9,000 to $16,000 for two-car couples
- New or replacement vehicle (amortised over 8 to 10 years): $3,000 to $6,000 per year
- Rideshare, taxis and public transport (increases as driving reduces): $1,000 to $4,000 per year in later retirement
One of the most common and costly surprises for retirees in their late 70s and 80s is the need to stop driving. Planning for a transition from car ownership to alternative transport avoids being caught without a budget for it.
5. Travel and Leisure
Travel is typically the highest discretionary expense in early retirement and the category most people most consistently underestimate. Many retirees treat travel as an afterthought rather than a planned budget line, then find themselves dipping into capital reserves that were not intended for this purpose.
- Domestic travel (2 to 3 trips per year): $4,000 to $10,000 per year per couple
- International travel (1 trip every 1 to 2 years): $8,000 to $25,000 per trip for couples depending on destination
- Hobbies, club memberships, entertainment: $3,000 to $8,000 per year
- Gifts and family contributions (grandchildren, weddings, house deposits): $3,000 to $15,000 per year; highly variable
A couple who takes two domestic trips and one international trip per year in their 60s could spend $20,000 to $35,000 annually on travel and leisure, which is nearly half of ASFA’s total comfortable retirement figure for a couple. Budget for travel explicitly in the first decade; many retirees spend far more in years 1 to 10 than ASFA’s benchmark suggests and considerably less in years 15 to 25.
6. Aged Care: The Expense Almost Nobody Plans For
Aged care is the retirement expense that most comprehensively derails financial plans because the costs are large, complex, and arrive at a time when cognitive and physical capacity to manage finances may be reduced.
Home care (Commonwealth Home Support Programme and Home Care Packages):
Government-subsidised home support ranges from basic services (Level 1, approximately $9,000 per year in government contribution) to high-level care (Level 4, approximately $62,000 per year in government contribution). Recipients pay a means-tested contribution on top of the government subsidy. In 2026, the daily basic fee for home care is approximately $11.50 per day (approximately $4,200 per year); income-tested fees can add significantly more depending on income. The My Aged Care website provides current fee schedules and a contribution calculator.
Residential aged care:
| Cost component | What it is | Typical 2026 range |
|---|---|---|
| Refundable Accommodation Deposit (RAD) | Lump sum paid to secure a room; refunded on departure | $300,000 to $750,000 or more depending on facility and location |
| Basic daily fee | Set at 85% of the Age Pension; everyone pays this | Approximately $63 per day (approximately $23,000 per year) in 2026 |
| Means-tested care fee | Income and asset-tested; varies based on financial position | $0 to $35,000 or more per year depending on assets and income |
Total residential aged care costs can reach $60,000 to $100,000 or more per year (excluding the RAD, which is returned) for those with significant assets. The RAD itself, often $400,000 to $600,000, must be funded from assets. How it is sourced from super, investment property sale, or family home sale has significant tax and pension implications.
The AIHW aged care data shows that around 1 in 3 Australians will use some form of formal aged care in their lifetime. Proactive aged care planning, ideally starting in your late 50s or early 60s, includes understanding your likely needs, reviewing your estate plan, and ensuring your financial structure can fund care costs without forced asset sales at short notice.
For dementia care specifically, which was appearing in the GSC queries for this post: dementia care at home typically costs $15,000 to $40,000 per year on top of the standard home care fees. Residential memory care units generally charge at the higher end of the RAD and means-tested fee ranges. The Dementia Australia cost overview provides current guidance.
7. Telecommunications, Technology and Subscriptions
Often overlooked in retirement budgets, this category has grown as retirees maintain streaming services, smartphone plans, NBN connections and device upgrades.
- Smartphone plan: $300 to $800 per year
- NBN internet: $800 to $1,400 per year
- Streaming subscriptions (Netflix, Stan, Foxtel): $600 to $1,500 per year
- Device replacements (phone, laptop, tablet amortised): $300 to $700 per year
- Total: approximately $2,000 to $4,400 per year per household
8. Insurance (Beyond Health)
Life insurance needs typically reduce in retirement, but several insurance types remain important and carry increasing premiums with age.
- Home and contents (already included in housing): $1,500 to $3,500 per year
- Car insurance: included in transport costs above
- Travel insurance (increasingly important and expensive for older Australians): $400 to $2,500 per trip depending on age and destination
- Funeral insurance or prepaid funeral plan (amortised): $200 to $600 per year
Travel insurance premiums increase sharply from age 70 onwards and can include significant premium loadings for pre-existing conditions. This is a commonly underestimated cost for retirees who travel frequently.
What Does Retirement Living Actually Cost Per Month?
A practical summary of monthly costs at different spending levels for a single homeowner in 2026:
| Category | Modest ($35,199/year) | Comfortable ($54,240/year) | Active traveller ($70,000/year) |
|---|---|---|---|
| Housing (rates, insurance, maintenance, utilities) | $900 | $1,300 | $1,400 |
| Healthcare and medical | $450 | $900 | $1,100 |
| Food and groceries | $700 | $950 | $1,100 |
| Transport | $350 | $600 | $700 |
| Travel and leisure | $100 | $550 | $1,800 |
| Subscriptions and technology | $100 | $200 | $250 |
| Clothing and personal | $100 | $170 | $300 |
| Contingency and irregular costs | $133 | $350 | $600 |
| Monthly total | ~$2,833 | ~$5,020 | ~$7,250 |
| Annual equivalent | ~$33,996 | ~$60,240 | ~$87,000 |
These are illustrative monthly budgets. Individual costs vary significantly based on location, health, lifestyle and housing situation.
How to Cut Costs in Retirement Without Sacrificing Quality of Life
Several of the queries appearing for this post specifically ask about reducing retirement costs. The most effective approaches are:
Own your home before you retire. The single biggest lever. Eliminating rent or mortgage payments from your retirement budget reduces required annual spending by $15,000 to $35,000 depending on location, which extends savings longevity dramatically.
Time large purchases before retirement. A car replacement, home renovation or major appliance upgrade before retiring (when income is still flowing) avoids drawing lump sums from retirement savings in the early years when sequencing risk is highest.
Maximise the Pensioner Concession Card benefits. The PCC provides discounted PBS medications, public transport concessions, utility rebates ($200 to $800 per year depending on state), reduced vehicle registration and council rate concessions. The cumulative annual value is typically $2,000 to $5,000, making it worth actively managing assets to retain any level of Age Pension payment.
Build a realistic travel budget in advance. Rather than treating travel as unplanned discretionary spending, building a dedicated annual travel budget prevents capital drawdown surprises.
Review private health insurance cover annually. Many retirees maintain extras cover they no longer use or hospital cover at a level higher than their actual risk profile requires. Reviewing this annually with a health insurance comparison can save $500 to $2,000 per year.
Plan healthcare costs proactively. Maintaining preventive dental and optical care tends to be less expensive than reactive treatment. Bulk-billing GPs, pharmacist medication reviews and NDIS-related health services (for eligible Australians) all reduce out-of-pocket costs without reducing care quality.
FAQ: Cost of Living in Retirement in Australia
What is the cost of living in retirement in Australia? According to ASFA’s February 2026 standard, comfortable retirement costs $54,240 per year for a single homeowner (approximately $4,520 per month) and $77,375 per year for a couple (approximately $6,448 per month). A modest retirement costs $35,199 for a single homeowner. Renters need to add $15,000 to $20,000 per year for housing costs.
What is the average cost of retirement per month? For a single homeowner living comfortably, approximately $4,520 per month or $1,042 per week based on the ASFA February 2026 standard of $54,240 per year. For couples, approximately $6,448 per month or $1,488 per week. These are averages; your actual costs depend on location, health and lifestyle.
What are the biggest expenses in retirement? For most Australians: housing (rates, insurance, maintenance and utilities for homeowners; rent for renters), healthcare and medical costs (private health insurance, dental, specialist visits, medications), and aged care in later retirement. Travel and leisure is often the largest discretionary expense in the first decade of retirement.
How much does retirement healthcare cost in Australia? Healthcare costs per person range from approximately $6,000 to $15,000 per year in the early retirement years (ages 60 to 74) and increase to $9,700 to $24,000 per year in the 75 to 84 range. The AIHW reports that per-capita health spending roughly doubles between ages 65 to 74 and 85 and over.
What does retirement living cost for someone over 55? From age 55 before super is accessible, most living costs are similar to those above, but without Pensioner Concession Card access or Age Pension eligibility. Healthcare costs are generally lower in the 55 to 60 age range. The main financial challenge for over-55 retirees is funding living costs from outside-super assets before super access at 60.
How much does residential aged care cost in Australia in 2026? The basic daily fee is approximately $63 per day (approximately $23,000 per year). A Refundable Accommodation Deposit of $300,000 to $750,000 is typically also required to secure a room (refunded when leaving). Means-tested care fees can add $0 to $35,000 or more per year depending on assets and income. Total costs for those with significant assets can reach $60,000 to $100,000 per year excluding the RAD.
How do retirement costs compare in Australia versus the USA? Healthcare costs are substantially lower in Australia due to Medicare, the PBS pharmaceutical benefits scheme and the public hospital system. Aged care is partially subsidised through the government-funded My Aged Care system. Housing costs vary by city comparably to major US cities. Food and transport costs are broadly similar. Overall, Australian retirees benefit significantly from the public health and aged care systems compared with American retirees, who face much higher out-of-pocket medical and long-term care costs.
What is the cost of living in Australia for retirees compared to the average? ABS data shows average household expenditure for Australians aged 65 and over is approximately $47,000 to $52,000 per year for couples and $28,000 to $35,000 for singles, lower than the ASFA comfortable standard but higher than the modest standard. These averages include both homeowners and renters and reflect actual spending rather than benchmark recommendations.
What to Do Next
Understanding what retirement costs is useful. Understanding whether your specific savings, spending plan and Age Pension position add up across a 25 to 30 year retirement is the more important question.
Take the free Wealthlab retirement quiz for a general read on your retirement readiness. Or book a free, no-pressure chat with the Wealthlab team to talk through how your specific retirement budget and savings interact.
