At age 67, those born in 1960 or later qualify for what’s considered their full retirement benefit from Social Security. That means you get the full amount you qualify for, instead of having benefits reduced if you take them early, starting at age 62.
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While waiting until at least age 67 — or up to 70 to earn delayed retirement credits — can result in more monthly income, the reality is that the average middle-class retiree takes Social Security earlier.
On average, people claim Social Security benefits around age 65, although that’s been trending up slightly over the past few decades, according to the Center for Retirement Research at Boston College.
By still claiming Social Security early, combined with relatively modest retirement savings, the average person often faces a tight retirement budget.
The median retirement savings balance for a household led by someone ages 65-74 is $200,000, according to the Federal Reserve. While that might sound like a lot, keep in mind that it likely needs to last 15-30 years or so.
The upside, though, is that expenses tend to fall in retirement, such as if you’ve paid off your house and cars by then.
Altogether, these factors generally mean that average spending by age 67 is significantly less than pre-retirement, and spending continues to fall further into retirement.
To estimate the average middle-class retiree spending at age 67, we can compare spending amounts across different age ranges from the Consumer Expenditure Surveys (CE) program from the U.S. Bureau of Labor Statistics. For those ages 55-64, average annual spending is $83,379, and for those 65-74, the average drops down to $65,149.
If we assume that these averages roughly correspond to the midpoint of these age ranges, that means average annual spending at age 60 is $83,379, and that drops down by 21.9% to reach $65,149 by age 70.
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Based on a compounding decline, that means spending falls by about 2.44% per year, and by age 67, spending would be about $70,139. Monthly, this results in roughly $5,845 in spending for a middle-class retiree at age 67.
Housing is usually the largest expense, with someone ages 65-74 spending the equivalent of about $1,851 per month. That might not always be the exact monthly amount, considering variable costs like maintenance, but it’s something retirees should plan for.
