The short answer: the biggest expenses in retirement in Australia are housing, healthcare and (later) aged care. According to the ASFA Retirement Standard (February 2026), a comfortable retirement costs $54,840 a year for a single homeowner and $77,375 a year for a couple. A modest retirement costs around $32,915 a year for a single and $47,387 for a couple. Both figures assume you own your home outright. Renters need to add roughly $15,000 to $20,000 a year depending on the city.
But those headline numbers are averages, and they mask two things most retirees don’t plan for: the way expenses shift dramatically across a 25 to 30 year retirement, and the categories that get badly underestimated, particularly healthcare from your 70s and aged care from your 80s. This guide breaks down every major retirement expense with real 2026 figures, walks through how spending changes across the three stages of retirement, and flags the three costs that derail the most retirement plans.
Please note: All figures, tables and scenarios in this article are approximate and for illustrative purposes only. Individual outcomes will vary based on personal circumstances, location, health, investment returns and current government policy. This is general information, not personal advice. ASFA figures are current as at February 2026 and are updated quarterly. Always verify current figures on the ASFA website before relying on them.
Retirement expenses at a glance: the 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 | $54,840 / year | $77,375 / year | ~$1,488 / week |
| Modest retirement | $32,915 / year | $47,387 / year | ~$912 / week |
ASFA defines “comfortable” as covering private health insurance, a reasonable car, domestic and some international travel, dining out occasionally, 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 a year depending on location, making a comfortable retirement for a single renter closer to $70,000 to $75,000 a year.
These are averages. Your actual costs depend heavily on your location, health, lifestyle, and whether you have a partner. What the headline numbers don’t show is how costs shift across the retirement journey, which is the bit most planning misses.
How retirement expenses 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 the three stages of retirement:
| Stage | Ages (typical) | 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+ | Lower lifestyle spend but high care costs | Aged care fees, home care, medical, reduced discretionary | Highly variable, care costs can exceed $80,000 / year |
In our experience advising hundreds of Australian families, the most consistently underbudgeted stage is the “No-Go” years. People plan well for the active first decade of retirement and reasonably well for the middle decade, but aged care costs in the 80s regularly catch families off guard. They assume expenses will simply taper off as activity slows. They taper on the lifestyle side, but often spike sharply on the care side.
Scott and Phil unpacked this on the podcast in Is Early Retirement a Trap?. The data point that surprises most people: roughly 34% of retirement savings end up consumed by healthcare, and the final 24 months of life consume between 50 and 80% of total lifetime healthcare spending. That concentration is the part that derails plans built on flat annual budgets.
The eight biggest expense categories in Australian retirement
1. Housing: the largest single cost
Housing remains the biggest single expense in retirement, whether you own or rent.
For homeowners (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 / body corporate (if applicable) | $2,000 to $8,000 | $2,000 to $8,000 |
| Total (no mortgage) | $10,000 to $25,500 | $11,000 to $27,000 |
For renters: renting in retirement adds a substantial fixed cost on top of every other expense. Median rents in Australian capital cities in 2026 range from roughly $22,000 a year in Adelaide to $35,000 or more a year in Sydney for a modest 2-bedroom unit. That’s a $15,000 to $25,000 a year difference compared with owning outright, which is why home ownership status is one of the most significant variables in retirement income planning. The AIHW’s housing assistance report documents the growing financial pressure on older Australians who are renting into retirement.
Maintenance is particularly underestimated by homeowners. Older homes need more upkeep, and a single roof replacement, driveway reseal, or bathroom renovation can cost $10,000 to $30,000. These aren’t recurring annual expenses, but they arrive with regularity over a 25-year retirement, and they need to be budgeted as a sinking fund rather than ignored.
2. Healthcare and medical: the fastest-growing expense
Healthcare is consistently the expense category that grows most rapidly through retirement, and the one most frequently underestimated in retirement budgets.
| Healthcare cost | Ages 60 to 74 | Ages 75 to 84 | Ages 85+ |
|---|---|---|---|
| Private health insurance (hospital + 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 + 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’s Health Expenditure Australia report consistently shows that per-capita health spending roughly doubles between ages 65 to 74 and 85+. A retiree budgeting $8,000 a year for healthcare at 65 may need $15,000 to $20,000 a year by 85, an extra $7,000 to $12,000 a year that’s often not accounted for in simple retirement income projections.
Dental is one of the most consistently underestimated healthcare costs. Medicare doesn’t cover routine dental for adults, and a single dental implant can cost $3,000 to $6,000. Most older Australians need significant dental work across retirement. Many retirees we work with plan for $1,500 to $3,000 per person per year from age 65 specifically for dental.
3. Food and groceries
Food costs are relatively stable across retirement stages, but tend to be underestimated for couples who enjoy dining out. Based on ABS Household Expenditure Survey data and ASFA’s breakdown:
- Singles: $9,000 to $14,000 a year (groceries plus occasional dining out)
- Couples: $13,000 to $20,000 a year (groceries plus regular dining out)
Costs at the higher end reflect dining out two to three times a week, which is common in the active early years of retirement when social engagement is high. Food costs typically decline through the Slow-Go and No-Go years as appetite and activity reduce.
4. Transport
Transport costs evolve significantly across retirement. In the Go-Go years, car ownership and travel dominate. In later years, car use typically reduces but public and assisted transport costs may increase.
- Car running costs (fuel, registration, insurance, servicing): $5,000 to $10,000 a 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 a year
- Rideshare, taxis, public transport (increases as driving reduces): $1,000 to $4,000 a year in later retirement
One of the most common surprises for retirees in their late 70s and 80s is the transition away from driving, and the associated loss of independence and increase in transport costs. Planning for the shift from car ownership to alternative transport (rideshare, community transport, taxis) 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 retirees underestimate. Many treat travel as an “if we can afford it” afterthought rather than a planned budget line, then find themselves dipping into capital reserves that weren’t intended for this purpose.
- Domestic travel (2 to 3 trips a year): $4,000 to $10,000 a year per couple
- International travel (1 trip every 1 to 2 years): $8,000 to $25,000 per trip for couples, depending on destination and duration
- Hobbies, club memberships, entertainment: $3,000 to $8,000 a year
- Gifts, family contributions (grandchildren, weddings, house deposits): $3,000 to $15,000 a year, highly variable
A couple who takes two domestic trips and one international trip a year in their 60s could easily spend $20,000 to $35,000 annually on travel and leisure, close to half of ASFA’s total comfortable retirement figure for a couple. Budget for travel explicitly in the first decade. Many retirees we see spend well above ASFA’s benchmark in years 1 to 10 and well below it in years 15 to 25.
6. Aged care: the expense almost nobody plans for
Aged care is the retirement expense that most often derails financial plans, because the costs are large, complex, and arrive at a time when cognitive and physical capacity to manage finances is reduced.
The Australian aged care system operates through two main pathways:
Home care (Commonwealth Home Support Programme and Home Care Packages): government-subsidised home support ranges from basic services (Level 1, around $9,000 a year in government contribution) to high-level care (Level 4, around $62,000 a 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 a day (around $4,200 a 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: moving into a residential aged care facility involves three main costs:
| Cost component | What it is | Typical 2026 range |
|---|---|---|
| Refundable Accommodation Deposit (RAD) | Lump sum “bond” paid to secure a room; refunded on departure | $300,000 to $750,000+ depending on facility and location |
| Basic daily fee | Set at 85% of the Age Pension; everyone pays this | ~$63 / day (~$23,000 / year) in 2026 |
| Means-tested care fee | Income and asset-tested | $0 to $35,000+ a year depending on assets and income |
Total residential aged care costs can reach $60,000 to $100,000+ a 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, and how it’s 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.
Aged care planning ideally starts in your late 50s or early 60s. Understanding your likely needs, reviewing your estate plan, and ensuring your financial structure can fund care costs without forcing rushed asset sales is far more effective than reacting under pressure later.
7. Family financial support
This is the retirement expense category most consistently absent from published benchmarks but most consistently present in real retirement spending. Australians are increasingly supporting adult children with house deposits, contributing to grandchildren’s education, and covering family celebration costs (weddings, milestone birthdays, family holidays).
Retiree spending on family support regularly runs $5,000 to $20,000 a year, often without being budgeted. This doesn’t mean it shouldn’t happen. It means it should be planned. A retiree who gifts $15,000 a year to adult children (within the legislated gifting limits for Age Pension purposes, see our guide on legal strategies for super and the Age Pension) over 20 years of retirement contributes $300,000 to their family. A meaningful legacy that needs to be accounted for in the income plan.
8. Financial and professional services
- Financial advice fees: $3,000 to $8,000 a year for ongoing retirement planning and portfolio management
- Tax return and accounting: $500 to $2,000 a year
- Legal fees (will updates, estate administration, power of attorney): $500 to $3,000+ periodically
Complete retirement budget: singles vs couples vs renters
| Expense category | Single homeowner | Couple homeowners | Single renter (add) |
|---|---|---|---|
| Housing (rates, insurance, utilities, maintenance) | $12,000 to $18,000 | $14,000 to $22,000 | +$18,000 to $30,000 rent |
| Healthcare (insurance + out-of-pocket) | $7,000 to $12,000 | $12,000 to $20,000 | Same |
| Food and groceries | $9,000 to $14,000 | $13,000 to $20,000 | Same |
| Transport (car + travel) | $8,000 to $14,000 | $12,000 to $22,000 | Same |
| Leisure, hobbies, entertainment | $5,000 to $10,000 | $8,000 to $15,000 | Same |
| Clothing, personal care, subscriptions | $3,000 to $5,000 | $4,000 to $7,000 | Same |
| Family support and gifts | $2,000 to $10,000 | $3,000 to $15,000 | Same |
| Professional services | $2,000 to $5,000 | $2,500 to $6,000 | Same |
| Total (comfortable lifestyle) | ~$48,000 to $88,000 | ~$68,500 to $127,000 | +$18,000 to $30,000 |
| ASFA comfortable benchmark | $54,840 | $77,375 | Not benchmarked separately |
Ranges reflect variation in lifestyle, location, and health. Travel and leisure at the higher end is typical of early Go-Go retirement years. Healthcare at the higher end is more typical from age 75+. ASFA figures are for homeowners; renter costs are indicative additions based on 2026 median rents. Sources: ASFA Retirement Standard February 2026; AIHW; ABS Household Expenditure Survey.
The three costs most likely to derail your retirement plan
Three expenses are most often underestimated, and when they hit, they hit hard:
- Out-of-pocket dental costs from age 70+. Most retirees budget for private health insurance but not for the gap between what insurance covers and what dental work actually costs. A single implant ($3,000 to $6,000), full dentures ($3,000 to $7,000), or complex periodontal treatment ($2,000 to $5,000) can occur with little warning and cost far more than private health insurance will cover. Many retirees we work with plan for $2,000 to $4,000 per person per year from age 70.
- The Refundable Accommodation Deposit for aged care. The RAD isn’t a fee, it’s a bond that’s refunded when you leave or die. But it must be paid upfront, typically $400,000 to $600,000, and must come from your assets. For many families, this triggers the sale of the family home, an investment property, or a significant chunk of super, with CGT, pension, and estate planning implications that weren’t anticipated. Planning for this from your late 60s avoids making rushed decisions under pressure.
- Financial support to adult children. Helping with house deposits, bridging finance for children going through divorce, or contributing to grandchildren’s education is financially significant and emotionally difficult to decline. These costs are real, regular, and rarely in the budget. Including a “family support” line, even conservatively at $5,000 a year, is one of the most useful things you can do in a retirement budget.
How to build a retirement budget that accounts for all of this
The ASIC Moneysmart budget planner is a free tool for mapping expected retirement expenses, and our own Wealthlab super calculator can help model whether your projected balance is in range. For a more structured approach:
- Build a line-by-line budget for years 1 to 10 (Go-Go phase). This is where travel and lifestyle costs are highest and ASFA benchmarks are most likely to understate your actual spending.
- Build a separate projection for years 10 to 25 (Slow-Go phase). Reduce travel by 40 to 50%, increase healthcare by 30 to 50%.
- Create an aged care contingency. Many retirees we work with set aside or earmark $150,000 to $300,000 of their retirement assets specifically for aged care costs, separate from living expense calculations.
- Review annually. Your actual spending in year 1 of retirement is the best predictor of years 2 to 5. Track it and adjust your projections based on reality rather than assumptions.
- Stress-test against healthcare shocks. What happens to your plan if you need $50,000 in unbudgeted healthcare in your early 70s? If the answer is “it depletes the emergency buffer but doesn’t change the trajectory”, you’re well-positioned. If the answer is “it forces asset sales”, you need a larger buffer.
For a comprehensive view of whether your income can sustain these expenses across a full retirement, see our guide on whether $1 million is enough to retire in Australia, which models income longevity at different spending levels. And if you want to understand how your investment strategy should evolve as expenses change through retirement, see our guide on whether to keep investing after retirement.
Frequently asked questions
What are the biggest expenses in retirement in Australia?
For most Australian retirees, the three largest expense categories are housing (rates, insurance, maintenance, or rent), healthcare and out-of-pocket medical costs, and, in later retirement, aged care. Food, transport, and travel are significant but more predictable and controllable. The ASFA Retirement Standard (February 2026) puts total comfortable retirement spending at $54,840 a year for singles and $77,375 a year for couples who own their home. Healthcare and aged care costs in the 70s and 80s regularly exceed the amounts implied in these benchmarks.
How much does it cost to retire in Australia?
According to the ASFA Retirement Standard (February 2026), a comfortable retirement costs $54,840 a year for a single homeowner and $77,375 a year for a couple. A modest retirement costs $32,915 a year for a single and $47,387 for a couple. Both assume you own your home. Renters typically need an extra $15,000 to $20,000 a year on top. Your actual costs depend heavily on your location, health, lifestyle and family commitments, and spending tends to be higher in the active early years and lower in the middle years before rising again with care costs in later life.
What are typical retirement spending levels in Australia?
There are two standard benchmarks. The ASFA “comfortable” level for homeowners is around $54,840 a year for singles and $77,375 a year for couples, covering private health insurance, a reasonable car, regular dining out, and domestic and occasional international travel. The ASFA “modest” level is around $32,915 a year for singles and $47,387 a year for couples, covering basic needs with limited discretionary spending. Many Australian retirees fall somewhere between these two levels, and most see their spending change significantly across the Go-Go, Slow-Go and No-Go phases of retirement.
How much does healthcare cost in retirement in Australia?
Healthcare is one of the most variable and fastest-growing retirement expenses. In the early retirement years (60 to 74), total healthcare costs (private health insurance, dental, optical, and out-of-pocket medical) typically run $7,000 to $15,000 per person per year. From age 75, costs regularly reach $10,000 to $25,000 per person as chronic conditions, specialist care, hearing aids and complex dental work increase. The AIHW reports that per-capita health spending roughly doubles between ages 65 to 74 and 85+. Planning for healthcare costs that increase by 50 to 100% from your early retirement to your late 70s is a more realistic basis than assuming a flat annual figure.
How much does aged care cost in Australia in 2026?
Aged care costs depend heavily on the level of care required and the type of service. Home care packages range from basic support (government contributes around $9,000 a year at Level 1) to intensive support (around $62,000 a year at Level 4), with residents paying a means-tested contribution on top. Residential aged care involves a Refundable Accommodation Deposit (typically $300,000 to $750,000, refunded when you leave), a basic daily fee (around $23,000 a year in 2026), and a means-tested care fee that can add $0 to $35,000+ a year depending on assets and income. Total out-of-pocket costs in residential care (excluding the refundable RAD) typically run $25,000 to $60,000+ a year. The My Aged Care website has current fee schedules and a means-tested contribution calculator.
Do retirement expenses decrease as you get older?
Partially, but not in the way most people expect. Lifestyle and discretionary expenses (travel, dining out, hobbies) typically decrease from your mid-70s as activity reduces. But healthcare, prescription medication, home support, and eventually aged care costs increase, often significantly enough to offset or exceed the lifestyle savings. The net effect is that total retirement spending tends to follow a U-shape: high in the active early years, lower in the middle years, then elevated again in the late years when care costs dominate. Planning a flat annual budget across a 30-year retirement systematically underestimates costs in both the first and last decades.
How much do I need in super to cover retirement expenses?
Using the ASFA February 2026 figures, a single homeowner targeting a comfortable retirement needs around $630,000 in super at 67, and a couple needs around $730,000. These figures assume a partial Age Pension supplements the drawdown. If you’re a renter, plan for $15,000 to $20,000 a year extra in spending. If you plan an active travel-heavy early retirement, budget 20 to 30% above ASFA for the first decade. If you expect significant aged care costs in later life, a contingency of $150,000 to $300,000 is worth modelling. For a full income longevity analysis, see our guide on whether $1 million is enough to retire in Australia.
What retirement expenses can I reduce?
The most controllable retirement expenses are travel and leisure (plan it explicitly rather than spending ad hoc), private health insurance (review annually to make sure you’re not over-covered), transport (one car instead of two as activity reduces, then rideshare as driving stops), and discretionary family support (structured gifting within limits rather than reactive transfers). Housing costs for homeowners are relatively fixed but can be reduced through downsizing, which also releases equity and may trigger downsizer super contribution eligibility for those aged 55+. Healthcare costs are largely non-discretionary once conditions develop, which is why building an adequate healthcare contingency buffer early in retirement tends to be more effective than trying to reduce costs later.
Plan for the expenses you expect and the ones you don’t
The retirees who run into financial difficulty in Australia almost never failed to save enough. They failed to plan for the right expenses. A budget that accounts for the three phases of retirement, explicitly includes healthcare escalation and an aged care contingency, and is honest about family support costs is far more reliable than one built on headline ASFA benchmarks alone.
Want to talk through how this works for your situation? Book a free chat with the Wealthlab team. No pressure, no jargon, just a conversation about your retirement budget and where the gaps might be.
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