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If you’re a retiree on a tight budget, you’re probably spending a lot of time stressing about the little things. Maybe you’re diligent about collecting loyalty points while grocery shopping or replacing old bulbs with LEDs to save on utilities.

But if you’re looking to save money, it’s probably better to focus on the biggest line items in your budget.

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The Federal Reserve’s latest Consumer Expenditure Survey (1) from 2024 offers a glimpse into the typical retiree’s annual expenses and there are two categories that cover a whopping 52.5% of total annual spend.

Understanding and tackling these two categories could have a noticeable impact on your retirement budget and quality of life.

As of 2024, a typical retiree spent $59,616 on average. The Federal Reserve’s survey breaks this total budget down into several specific categories, ranging from tobacco products to pet foods.

However, much of the budget is dominated by just two categories: housing and transportation.

The average retiree spent $22,079 on housing in 2024. That is the largest line item on the survey and accounts for 37% of the total budget. Simply put, many seniors are spending more than a third of their budget just on shelter.

It’s a symptom of the ongoing housing affordability crisis, which The Chamber of Commerce (2) recently described as “the most urgent challenge facing the housing market.”

“A severe shortage of over 4.7 million homes has created cascading economic and social challenges,” says the report. Young families and first-time homebuyers bear the brunt of this crisis, but retirees who rent or are still paying a mortgage are impacted by this too.

Transportation has faced a similar surge in prices. As of 2026, the national average gas price is $4.22, according to AAA (3) and the average new car costs $49,461, roughly 30% more than 2019, according to Kelley Blue Book (4) data cited by CBS News (5).

Back in 2024, retirees were spending $9,244 on average on transportation, which accounted for 15.5% of total annual expenses. Together, housing and transportation accounted for more than half (52.5%) of a typical senior’s yearly spending.

Focusing on these two huge line items could have a noticeable impact on your budget.

Read More: Here’s the average income of Americans by age in 2026. Are you falling behind?

The rising cost of essentials is also creating opportunities for investment. In other words, investing in real estate can help you get some exposure to the rising cost of housing, which offsets some of the pressure your budget is likely experiencing.

You don’t need six- or seven-figures to get started. You can tap into this market by investing in shares of vacation homes or rental properties through Arrived.

Backed by world-class investors, including Jeff Bezos, Arrived allows individuals to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord yourself.

To get started, you can browse through their selection of vetted properties, each picked for their potential appreciation and income generation. Once you find a property you like, you can start investing with as little as $100, potentially earning monthly dividends.

And Arrived investors can gain access to the newly-launched quarterly secondary market, where investors can buy and sell shares of individual rental and vacation rental properties directly on the platform.

This allows you to buy into properties you may have missed at the initial offering or sell shares before a property reaches the end of its hold period.

With access to more than 400 properties in 60 cities, this new way to trade real estate opens up flexibility and opportunities to gain access to more properties every quarter.

Another way to offset costs is to connect your spending to automated savings with apps like Acorns.

This platform lets you automatically invest your spare change from everyday purchases into a diversified portfolio of ETFs managed by experts at leading investment firms like Vanguard and BlackRock.

For instance, if you buy a donut for $3.25, Acorns will round up the purchase to $4 and invest the change in a smart investment portfolio. So a $3.25 purchase automatically becomes a 75-cent investment in your future.

With Acorns, you can invest in a dividend ETF with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.

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FRED, Federal Reserve Economic Data (1); U.S. Chamber of Commerce (2); AAA Gas Prices (3); Kelley Blue Book (4); CBS News (5)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.