← News · 13 September 2025

What Is The Biggest Expense For Retirees?

Retirement is often imagined as a time when many expenses fall away: no commuting, children grown, fewer professional clothes, maybe paid work is reduced or stops. In many cases, that’s true. However, other expenses for retirees remain high—or even increase—especially in areas such as health, aged care, and the cost of living more generally. As retirees enter their 80s and 90s, these costs can shift sharply, making planning vital. One of the biggest concerns is the overall expense for retirees.

Here are key expenses for retirees, categorised by type, what tends to happen to them over time, relevant data, and some practical tips for managing them.

Key Expense For Retirees By Category

I’ll focus on housing (including mortgages/rent), transportation, healthcare/medications, food & dining out, utilities, and the accelerating costs of care/aged care in advanced age.

1. Housing and Mortgages / Rent

What to expect:

• Many retirees own their homes outright. According to the Final Report of the Aged Care Taskforce (2024), home ownership rate among people aged 65+ was ~82% in 2021. (Department of Health Australia)
• But not everyone will have no housing costs: some still carry mortgages, some rent, or may move into retirement villages or aged care, which bring other housing-equivalent costs.
• For renters in particular, housing is often the biggest expense. A Grattan Institute report observes that two-thirds of retirees who rent privately live in poverty. (The Guardian)

How this changes with age:

• Mortgage costs can fall as loans are paid off; interest rates matter a lot. But if retirees downsize, move to more expensive areas, or shift into retirement villages / aged care, housing‐related costs can go up.
• For renters, there is no “pay‐off” point, so rent can remain a large burden, particularly as inflation/rent increases accumulate.

Data:

• The “ASFA Retirement Standard” (June 2025 quarter) puts annual expenses for a comfortable lifestyle for a homeowner couple (aged 65–84) at AUD $75,319 per year. A homeowner single person: $53,289. (ASFA)
• For modest lifestyles (still owning a home) or renting, amounts differ. For example, modest lifestyle (homeowner) for a couple: about AUD $49,992; modest renter couple about AUD $66,296. (ASFA)

Tips to reduce housing/mortgage/rent costs:

• Try to pay off mortgages before retiring so that interest and principal payments stop or shrink drastically.
• Downsize: smaller house, less maintenance, possibly lower property rates.
• Consider moving to regions with lower housing costs, if feasible and acceptable for lifestyle, health access etc.
• If renting, negotiate lease terms, shop around, or consider shared living options if appropriate.
• Investigate government concessions for rates, council charges, and property taxes (for pensioners).

2. Transportation

What to expect:

• Owning a car, maintaining it, paying insurance, fuel, registration all cost. For many retirees, car use declines over time (less commuting, fewer long trips).
• Public transport, taxis, ride-shares may replace car usage somewhat—but for older age, there are mobility issues, health issues, remote or regional living that make dependence on private transport necessary.

Changes with age:

• In 60s–70s: moderate transport costs still, active lifestyle, travel etc.
• 80s–90s: less frequent driving, maybe more dependence on family/friends, transport services, possible increased costs to maintain car safety, or need for specialized transport (medical, mobility support).

Data:

• The ASFA “weekly cost of retirement” (Couple) includes “Car and public transport” at about AUD $196.70/week for those wanting a comfortable lifestyle, and about $118.38/week for modest lifestyle. (CareSuper)
• For singles: around AUD $181.61/week (comfortable) and $111.15/week (modest). (CareSuper)

Tips to reduce transport costs:

• Choose location with access to good public transport.
• If owning a car, keep it well‐maintained so avoid big repairs, consider buying less expensive, smaller, fuel-efficient model.
• Use ride-share or community transport when possible instead of ownership.
• Plan to move closer to services as mobility reduces.

3. Healthcare and Medications

What to expect:

• One of the biggest cost pressures for retirees; tends to increase with age. More doctor visits, specialists, possibly increased premiums for private health insurance, more prescription drugs.

How it changes in later decades (80s, 90s):

• Health is more fragile. Chronic conditions often accumulate. Greater likelihood of needing in-home care, mobility aids, assisted living, hospitalisations. That brings expenses not just in treatments but transport, home modification, caregiving.

Data:

• In ASFA’s “comfortable” budget for homeowner couples, health including insurance and chemist is about AUD $223.46/week. (CareSuper)
• The “Age Pensioner and beneficiary” and “Pensioner” living cost indexes annual percentage increases include housing and health as among main contributors. From ABS data, between June 2024–25, “Housing and food and non‐alcoholic beverages” were among positive contributors to cost rises for “Pensioner and beneficiary households” on the Living Cost Indexes. (Australian Bureau of Statistics)
• There’s also a National Seniors survey showing that “health, energy and groceries” are the top three worries about expenses. (National Seniors Australia)

Tips to manage healthcare/medications costs:

• Make sure eligible concession cards (e.g. Commonwealth Seniors Health Card) are applied for—they reduce drug costs, some medical fees, and can yield other discounts. Many retirees eligible do not claim. (News.com.au)
• Review private health insurance: drop unnecessary extras, choose cover level carefully, shop for better premiums. Understand hospital excesses. (National Seniors Australia)

• Stay as healthy as possible: preventive care, exercise, good diet. Early detection of chronic conditions can reduce later cost.

• Look into aged care / home care supports early, to needed services vs emergency ones (which are often more expensive).

4. Food & Dining Out

What to expect:

• Food is essential, and grocery costs often continue or rise, especially with inflation. Dining out tends to decline naturally with age due to mobility, preference, income.

How it changes with age:

• In earlier retirement (60s–70s): more social outings, travel, dining out, entertaining.
• As health/mobility decline, dining out might reduce. Grocery shopping might shift (smaller shops, more expensive if buying pre-prepared, or more frequent trips) or costs increase if dietary restrictions.

Data:

• In ASFA’s “weekly cost of living in retirement” (couple, comfortable), Food is about AUD $256.71/week. (The Australian)
• For modest lifestyle, about $207.61/week for couples. (CareSuper)

Tips to save on food/dining:

• Plan meals, buy in bulk, use specials, cook at home.
• Grow some or buy from lower-cost suppliers when possible (markets, cooperatives).
• Limit expensive restaurants / dining out budgets; choose cheaper options.
• Watch for inflation effects in groceries (e.g. meat, vegetables) and adjust usage.

5. Utilities (electricity, water, rates, internet, phone)

What to expect:

• Utilities are sticky costs: even if usage falls (e.g. less air‐conditioning, fewer electronics), base costs, fees, minimum charges, connection charges stay. Energy prices have been volatile.

Changes with age:

• Possibly reduced usage, but if home needs modification (heating, medical equipment, lighting for safety) usage might increase. Also, older homes may be less efficient and expensive to maintain.

Data:

• From ASFA weekly breakdown: for homeowner couples, utilities are ~AUD $64.13/week (comfortable lifestyle), modest ~$54.82/week. For singles, comfortable ~$51.71/week, modest ~$40.82/week. (CareSuper)
• ABS «Selected Living Cost Indexes» (June 2025) showed that housing and food & non-alcoholic beverages were the main contributors to cost rises; utilities are part of housing costs broadly. (Australian Bureau of Statistics)

Tips to reduce utility costs:

• Insulate your home, upgrade to energy-efficient appliances, look for solar or other renewable options if viable.
• Shop for competitive utility providers, check for concessions for pensioners (electricity, water, rates).
• Be mindful of usage: avoid overheating/cooling excessively, use LED lighting, turn off standby devices.
• Bundle services where that gives discount; renegotiate internet/phone plans.

6. Aged Care and Care Services in Very Old Age

This is one of the areas where costs often increase substantially in very old age (80s–90s), or where unexpected expenses can make a big difference.

What to expect:

• As people age, many prefer to age in place (home), but over time need assistance: domestic help, personal care, home modifications, transport to medical appointments.
• Eventually some move to residential aged care, which involves accommodation, daily living assistance, nursing care.

Data:

• From “Providing and financing aged care in Australia”: The number of Australians aged 85+ is increasing fast: a sharp rise from 400,000 in 2010 to projected ~1.8 million by 2050. (PMC)
• Per‐person government spending on aged care services increased from AUD ~$5,354 to ~$6,097 (2018/19 → 2022/23). (Home Care Association)
• In 2022/23, the government spent about AUD 28.3 billion on aged care, with 58% on residential care and 33% on home care and support. (Home Care Association)

Costs individuals may face:

• Fees for home care packages; contributions based on income/assets.
• For residential care: daily care fees, accommodation costs (which may be a large lump sum deposit or ongoing payments), plus extra costs for specialised care (dementia, etc.).

Tips for planning / reducing aged care costs:

• Start investigating options early: what home modifications might be needed, cost of home care vs residential care.
• Understand what government subsidies (Commonwealth, state) one qualifies for; assess income/assets to see what co-payments may be.
• Budget for increasing medical/nursing/home care over time—as a retiree ages, set aside or invest for those costs.
• Consider insurance or private care “top-ups” if feasible.
• Decide preferences—for example, do you want to stay at home as long as possible, or move earlier to an aged care facility? That decision has cost implications.

How Costs Shift as You Age — 80s and 90s

Some broad patterns emerge in studies and surveys:

• Spending typically falls in some categories: travel, leisure, perhaps clothing and “non-essentials.” But that doesn’t always mean total spending drops. Some costs (health, aged care, assistance) rise enough to offset reductions. (SuperGuide)
• According to Super Consumers Australia (in SCA’s retiree spending guide), the budgets for retirees aged 85+ are slightly less but not hugely different from those aged about 65, assuming basic health and home ownership. The main changes are increased spending on health, in-home care/cleaning, less on transport & leisure. (SuperGuide)
• Studies show many older retirees expect their living costs will remain stable or increase, not decrease, in late retirement. In the National Seniors Social Survey, 17% of respondents said they'd expect spending more in later life; around 14% were unsure. (National Seniors Australia)

Why Planning is Essential

• Many retirees underestimate how much more health, care, mobility, and support services will cost as they age.
• Inflation hits essentials (food, utilities, medicines) more than luxury goods. If income is fixed (super + pension), rising costs erode purchasing power.
• Unexpected events (illness, care needs, accidents) can impose large costs. Being unprepared financially or insurance‐wise can lead to borrowing or depletion of savings.

Practical Tips: How to Minimise Costs & Improve Financial Security

Here are practical steps retirees (or those planning retirement) can take to better handle costs.

1. Make a detailed budget including current and future expected costs. Include all categories: housing, food, health, care, transport, utilities, leisure.
2. Work with a professional (financial planner, accountant) to project costs in later decades (80s–90s), run scenarios, include inflation, medical risk, aged care costs.
3. Maximise home ownership if possible before retirement. Own outright if you can, or downsize to reduce rates, maintenance, and mortgage risk.
4. Ensure access to all available government support and subsidies: Age Pension, rent assistance, Seniors Health Card, concessions on utilities, property, transport.
5. Manage health proactively: screening, healthy lifestyle, staying as independent as possible, to reduce high expense periods later.
6. Review insurance carefully: private health insurance, gap cover, equipment cover. Drop or adjust extras unnecessary; shop around for premiums.
7. Safeguard income streams: superannuation, investment income, possibly part‐time work or consulting if capability allows. Plan for income that keeps pace with inflation.
8. Plan for aged care early: understand possible costs, what choices you prefer, maybe pre‐arrange home modifications, consider setting aside funds or investments earmarked for care.
9. Watch utility and household cost efficiency: energy efficiency, home maintenance so big repair doesn’t come as a shock.
10. Keep flexibility: be prepared to adjust living arrangements, maybe move to lower cost areas or housing, trade off luxury/comfort vs affordability as needed.

Summary & Key Takeaways

• Retirement doesn’t automatically mean much lower expenses. Some costs go down (e.g. work‐related travel, possibly leisure or children’s costs), but health, aged care, housing, utilities remain large and often growing items.
• In later life (80s and 90s), costs for medical care, daily assistance, possibly residential care can become dominant. Anticipating this shift is important.
• Many retirees own homes, which helps—but those who rent or have mortgages are much more vulnerable.
• Inflation, especially in essentials (food, utilities, medicine), is a real threat. Even if headline inflation slows, retirees may feel cost pressures more keenly.
• Planning early, including realistic scenario work, using government help, and lifestyle choices (housing, location, health maintenance) can make a big difference.

Some Recent Data Snapshots

• ASFA (2025): Comfortable lifestyle, homeowner couple (65-84): AUD $75,319/year. Single homeowner: AUD $53,289/year. (ASFA)
• ASFA’s biggest weekly cost items for that couple: health (~AUD $223/week), food (~AUD $256/week), leisure (~AUD $342/week). (The Australian)
• National Seniors / Challenger survey: in older Australians, the everyday costs of health, energy, groceries are the top three concerns. (National Seniors Australia)

Final Words

If you’re approaching retirement or already retired, it pays to:

• Estimate—not guess: map out likely costs in each major category, including in your 80s/90s.
• Build reserves/savings for health and care expenses.
• Seek advice tailored to you. A skilled financial planner can help with tax, superannuation, investment, aged care planning.

Doing this will improve your odds of a secure, comfortable retirement—so that you’re not scrambling to cover unanticipated costs, and can make lifestyle choices (where to live, how to live) rather than just reacting.

References

1. ASFA Retirement Standard, “Budgets for various households and living standards for those aged 65-84 (June quarter 2025)”. (ASFA)
2. ASFA / Caresuper’s breakdown of “weekly cost of retirement". (CareSuper)
3. ABS Selected Living Cost Indexes, Australia, June 2025. (Australian Bureau of Statistics)
4. Super Consumers Australia, “Retiree spending guide / estimates aged 85+ vs around 65”. (SuperGuide)
5. National Seniors Australia / Challenger, “The cost of living and older Australians’ financial wellbeing” survey. (National Seniors Australia)
6. Government / Aged Care Taskforce, “Final Report of the Aged Care Taskforce”, 2024. (Department of Health Australia)
7. “Older Australia at a Glance”, AIHW. (AIHW)
8. “Providing and financing aged care in Australia”, PMC article. (PMC)
9. National Seniors report on Private Health Insurance (NSSS-12). (National Seniors Australia)