The biggest expenses in retirement in Australia are housing (including rates, insurance, and maintenance for homeowners, or rent for renters), healthcare and out-of-pocket medical costs, and later in retirement aged care. According to the ASFA Retirement Standard (February 2026), a comfortable retirement costs $54,840 per year for a single homeowner and $77,375 per year for a couple. But these headline figures mask two things most retirees don’t plan for: the way expenses shift dramatically across a 25–30 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 expense category with real 2026 figures, explains how spending changes across the three stages of retirement, and identifies the three costs that derail the most retirement plans.
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–$20,000 per year depending on location, making a comfortable retirement for a single renter around $70,000–$75,000 per year.
These are averages your actual costs depend heavily on your location, health, lifestyle, and whether you have a partner. What they don’t show is how costs shift across the retirement journey.
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 | 60–74 | High active lifestyle, travel-heavy | Travel, leisure, dining, home upgrades, helping adult children | 110–130% of benchmark |
| “Slow-Go” years | 75–84 | Moderate less travel, more healthcare | Healthcare, medications, home modifications, reduced travel | 85–105% 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 500+ 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 blindside families who assumed expenses would simply taper off as they slowed down. They taper on the lifestyle side, but often spike sharply on the care side.
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–$3,000 | $1,500–$3,000 |
| Home and contents insurance | $1,500–$3,500 | $1,500–$3,500 |
| Maintenance and repairs | $2,000–$6,000 | $2,000–$6,000 |
| Utilities (electricity, gas, water) | $3,000–$5,000 | $4,000–$6,500 |
| Strata/body corporate (if applicable) | $2,000–$8,000 | $2,000–$8,000 |
| Total (no mortgage) | $10,000–$25,500 | $11,000–$27,000 |
For renters: Renting in retirement adds a substantial fixed cost on top of all other expenses. Median rents in Australian capital cities in 2026 range from approximately $22,000/year in Adelaide to $35,000+/year in Sydney for a modest 2-bedroom unit a difference of $15,000–$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. The AIHW’s housing assistance report documents the growing financial pressure on older Australians who are renting into retirement.
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–$30,000 costs that are often not budgeted as recurring annual expenses but arrive with regularity over a 25-year retirement.
2. Healthcare and Medical: The Fastest-Growing Expense
Healthcare is consistently the expense category that grows most rapidly through retirement and is most frequently underestimated in retirement budgets.
| Healthcare Cost | Annual Range (Ages 60–74) | Annual Range (Ages 75–84) | Annual Range (Ages 85+) |
|---|---|---|---|
| Private health insurance (hospital + extras) | $3,500–$6,500 | $4,500–$8,000 | $5,000–$9,000+ |
| Out-of-pocket GP and specialist visits | $500–$2,000 | $1,000–$4,000 | $2,000–$6,000 |
| Dental (fillings, extractions, dentures, implants) | $1,000–$3,000 | $2,000–$5,000 | $1,000–$4,000 |
| Optical (glasses, contact lenses) | $300–$800 | $400–$1,000 | $400–$1,200 |
| Hearing aids (amortised annually) | $200–$600 | $800–$2,000 | $1,000–$3,000 |
| Medications (PBS gap + non-PBS) | $500–$2,000 | $1,000–$4,000 | $2,000–$6,000 |
| Total healthcare (per person) | $6,000–$15,000 | $9,700–$24,000 | $11,400–$29,200 |
The AIHW’s Health Expenditure Australia report consistently shows that per-capita health spending roughly doubles between ages 65–74 and 85+. This means a retiree who budgets $8,000/year for healthcare at 65 should be planning for $15,000–$20,000/year at 85 a difference of $7,000–$12,000/year that’s often not accounted for in simple retirement income projections.
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–$6,000. Most older Australians will need significant dental work across their retirement budgeting $1,500–$3,000 per year per person from age 65 is realistic.
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–$14,000/year (groceries plus occasional dining out)
- Couples: $13,000–$20,000/year (groceries plus regular dining out)
Costs at the higher end reflect dining out 2–3 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 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–$10,000/year for one car; $9,000–$16,000 for two-car couples
- New/replacement vehicle (amortised over 8–10 years): $3,000–$6,000/year
- Rideshare, taxis, public transport (increases as driving reduces): $1,000–$4,000/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 and the associated loss of independence and increase in transport costs. Planning for a transition 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 people most consistently underestimate. Many retirees 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 (2–3 trips/year): $4,000–$10,000/year per couple
- International travel (1 trip every 1–2 years): $8,000–$25,000 per trip for couples, depending on destination and duration
- Hobbies, club memberships, entertainment: $3,000–$8,000/year
- Gifts, family contributions (grandchildren, weddings, house deposits): $3,000–$15,000/year highly variable
A couple who takes two domestic trips and one international trip per year in their 60s could easily spend $20,000–$35,000 annually on travel and leisure — 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 1–10 than ASFA’s benchmark suggests and less in years 15–25.
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 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, ~$9,000/year in government contribution) to high-level care (Level 4, ~$62,000/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/day (~$4,200/year); income-tested fees can add significantly more depending on income. The My Aged Care website provides the current fee schedules and 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–$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; varies based on financial position | $0–$35,000+/year depending on assets and income |
Total residential aged care costs can reach $60,000–$100,000+ per year (excluding the RAD, which is returned) for those with significant assets. The RAD itself often $400,000–$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.
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 forcing rushed asset sales at the worst possible time.
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).
In our experience advising 500+ Australian families, retiree spending on family support regularly runs $5,000–$20,000 per 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 per 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–$8,000/year for ongoing retirement planning and portfolio management typically the highest-return professional expense in retirement
- Tax return and accounting: $500–$2,000/year
- Legal fees (will updates, estate administration, power of attorney): $500–$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–$18,000 | $14,000–$22,000 | +$18,000–$30,000 rent |
| Healthcare (insurance + out-of-pocket) | $7,000–$12,000 | $12,000–$20,000 | Same |
| Food and groceries | $9,000–$14,000 | $13,000–$20,000 | Same |
| Transport (car + travel) | $8,000–$14,000 | $12,000–$22,000 | Same |
| Leisure, hobbies, entertainment | $5,000–$10,000 | $8,000–$15,000 | Same |
| Clothing, personal care, subscriptions | $3,000–$5,000 | $4,000–$7,000 | Same |
| Family support and gifts | $2,000–$10,000 | $3,000–$15,000 | Same |
| Professional services | $2,000–$5,000 | $2,500–$6,000 | Same |
| Total (comfortable lifestyle) | ~$48,000–$88,000 | ~$68,500–$127,000 | +$18,000–$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 of ranges 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. Source: ASFA Retirement Standard February 2026; AIHW; ABS Household Expenditure Survey.
The Three Costs Most Likely to Derail Your Retirement Plan
Based on what we see consistently across 500+ Australian client families, these 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–$6,000), full dentures ($3,000–$7,000), or complex periodontal treatment ($2,000–$5,000) can occur with little warning and cost far more than private health insurance will cover. Budget $2,000–$4,000 per person per year from age 70.
- The Refundable Accommodation Deposit for aged care. The RAD is not a fee it’s a bond that’s refunded when you leave or die. But it must be paid upfront, typically $400,000–$600,000, and must come from your assets. For many families, this triggers the sale of the family home, the 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 costs is financially significant and emotionally difficult to decline. These costs are real, they are regular, and they are rarely in the budget. Including a “family support” line in your retirement budget even conservatively at $5,000/year is both honest and practical.
How to Build a Retirement Budget That Accounts for All of This
The ASIC Moneysmart budget planner provides a free tool for mapping your expected retirement expenses. For a more structured approach:
- Build a line-by-line budget for years 1–10 (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 10–25 (Slow-Go phase) reduce travel by 40–50%, increase healthcare by 30–50%
- Create an aged care contingency fund set aside or earmark $150,000–$300,000 of your retirement assets specifically for aged care costs, separate from your living expense calculations
- Review annually your actual spending in year 1 of retirement is the best predictor of years 2–5. 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
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/year for singles and $77,375/year for couples who own their home — but healthcare and aged care costs in the 70s and 80s regularly exceed the amounts implied in these benchmarks.
Healthcare is one of the most variable and fastest-growing retirement expenses. In the early retirement years (60–74), total healthcare costs including private health insurance, dental, optical, and out-of-pocket medical typically run $7,000–$15,000 per person per year. From age 75, costs regularly reach $10,000–$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 65–74 and 85+. Planning for healthcare costs that increase by 50–100% from your early retirement to your late 70s is prudent and increasingly necessary.
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 ~$9,000/year at Level 1) to intensive support (~$62,000/year at Level 4), with residents paying a means-tested contribution on top. Residential aged care involves a Refundable Accommodation Deposit (typically $300,000–$750,000, refunded when you leave), a basic daily fee (~$23,000/year in 2026), and a means-tested care fee that can add $0–$35,000+ per year depending on assets and income. Total out-of-pocket costs in residential care (excluding the refundable RAD) typically run $25,000–$60,000+ per year. The My Aged Care website provides current fee schedules and the means-tested contribution calculator.
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 follows 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 will systematically underestimate costs in both the first and last decades.
Using the ASFA comfortable retirement standard (February 2026) and a 3.5% sustainable withdrawal rate, a single homeowner targeting $54,840/year needs approximately $1.1–$1.4 million in total assets (depending on Age Pension eligibility). A couple targeting $77,375/year needs approximately $1.6–$2.0 million. These figures shift significantly if you’re a renter (add $15,000–$20,000/year to the spending target), if you plan active travel-heavy early retirement (budget 20–30% above ASFA for the first decade), or if you expect significant aged care costs in later life (add $150,000–$300,000 as a contingency). For a full income longevity analysis, see our guide on whether $1 million is enough to retire in Australia.
The most controllable retirement expenses are travel and leisure (plan it explicitly rather than spending ad hoc), private health insurance (review annually to ensure 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 is 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 will be far more reliable than one built on headline ASFA benchmarks alone.
At Wealthlab, we help Australian retirees and pre-retirees build retirement budgets and income plans that account for the full picture not just the comfortable middle years, but the active early years and the care-heavy later years too. Book a free consultation today to map your retirement expenses realistically and build an income plan that can handle all of them.