Are you losing sleep because you think you’re spending too much in retirement?  Or maybe you’re spending too little now because you are worried about possible future expenses?  A recent article by Christopher Carosa, entitled, “Why Are We Seeing More Cases of ‘Fear of Spending’ Among Retirees?” discusses this latter fear.  Mr. Carosa notes, “After a career focused on saving, when it comes time to retire, the saving tap is turned off and the spending tap is (supposed to be) turned on.  For many retirees, that’s when the sudden fear of spending kicks in.  And there may be indications this phobia is reaching pandemic levels.”

We here at “How Much Can I Afford to Spend in Retirement” won’t tell you how much you should spend in retirement or how to spend it.  We do understand, however, that the many uncertainties involved in retirement planning can and do lead to anxiety, stress and sub-optimal decisions.  Managing uncertainty is an area where we believe we can help.  And while our Actuarial Approach to personal financial planning will not eliminate uncertainties and retirement risks, it can give you robust tools and processes to manage these risks, calm your retirement spending fears and help you make better spending decisions.  All we ask is that you crunch a few numbers with the aid of our workbooks.

In this post, we will look at spending data from 2017/2018 from the U.S. Bureau of Labor Statistics Consumer Expenditure Surveys for the purpose of determining whether retirees in the U.S., on average, may be overspending or underspending.  The data are not all that well-suited for this purpose, but we can draw some conclusions from the table below.  In summary, we are not convinced by this data that there is an underspending pandemic spreading amongst retirees in the U.S.

While the results are definitely not conclusive, and are only averages, we think you might find the table below helpful for two reasons:

  1. You can compare your spending by category with the averages for your income level, and
  2. You may wish to use these broad spending categories in your budget calculations as discussed in our post of August 25, 2019.

The table below uses selected information from Table 3254. Consumer units with reference person age 65 and over by income before taxes: Average annual expenditures and characteristics, Consumer Expenditure Survey, 2017-2018.  Responses are averages for “consumer units” that may include one, two or more individuals.  Individuals in the consumer unit may not be retired and not all individuals in the consumer unit may be age 65 or older.  Expenditures are total expenditures for a year and include both recurring and non-recurring expenses.  Percentages shown represent percentages of the total income or total expenditures.  For the table, we selected the average of all income groups, one lower income group and the two highest income groups. 

Comments on Income

  • Social Security and pensions represent a large proportion of income for all but the highest income group. 
  • Wages and self-employment income represent 64% of the income of the highest group.
  • None of the groups had particularly high income from interest & dividends.

Comments on Expenditures

  • Housing, Healthcare and Food expenses represent a higher percentage of expenditures for lower income groups than higher income groups.
  • Personal taxes represent a higher percentage of expenditures for higher income groups.


  • Higher income groups appear to spend less of their income than lower income groups.
  • While higher income groups are a little more likely to own a home (with a higher average market value), they are also more likely to have a mortgage.


Based on this data, it is difficult to say whether retirees, on average, are either overspending or underspending today, relative to their future expense needs.  The data appears to indicate that a significant percentage of individuals in the higher income consumer units are still employed.  If this is true, then these individuals should probably be saving a significant portion of this income to maintain their living style once they eventually cease employment.  The trend in excess of income over expenditures for higher incomes appears to support this rational behavior.

All of the income groups appear to have significant home equity.  It is not clear from the data whether most retirees anticipate taping into this resource in some manner or whether they plan to hold it as a reserve for long-term care, other future expenses or bequest motives.

As discussed above, this data may not be terribly relevant for you if you have ceased working.   For this reason, we suggest that you crunch your own numbers using our workbooks. We believe that doing so will help you to address your fear of the unknown and to develop a better data point regarding the sustainability of your recurring retirement spending plan.

Article written by Ken Steiner and Bobbie Kalben for How Much Can I Afford to Spend in Retirement:

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