Everyone dreams of the day they can clock out for the last time and enjoy a retirement filled with rest, freedom, and maybe even golden sands. But for most Americans, retirement is far from lavish. While some may enjoy the occasional trip, indulge in a new hobby or two, and finally slow down after decades of work, many retirees are trying to stretch a modest, fixed income to cover rising costs that do not stop when they leave the workforce.
For public employees, this conversation is especially important. Teachers, firefighters, nurses, public safety officers, sanitation workers, school staff, and other public workers often spend their careers doing jobs that are essential to our communities but are not always highly paid.
Today’s retirees are navigating a financial landscape shaped by rising health care and housing costs, costly long-term care, prescription drug needs, and years of inflation that have made everyday essentials more expensive—steadily eroding the purchasing power of their dollars year after year.
Income Overview
Before we dive into the costs eating away at retirees’ income, let’s get real about what’s in their pockets.
The average Social Security retirement benefit is only a little more than $2,000 per month. According to the Social Security Administration, the estimated average monthly benefit for retired workers in January 2026 was $2,071. That sum is not enough on its own to cover housing, food, utilities, medical expenses, transportation, insurance, and unexpected emergencies for most retired workers. Social Security was never designed to be a retiree’s only source of income, yet for many older Americans, it makes up the bulk of their retirement livelihood.
Retirement savings are also far less robust than many people assume. Vanguard’s 2025 data found that the median defined contribution account balance for participants was under $100,000. Spread across 20 or 30 years of retirement, $100,000 does not go very far. A retiree withdrawing 4% from a $100,000 account would receive only about $4,000 a year.
Public pensions help fill this gap, but they are not extravagant. According to the National Association of State Retirement Administrators, state and local government retirement systems provide an average monthly benefit of roughly $2,428 to retirees and beneficiaries. That income is meaningful and stabilizing, but it is also modest when compared with the real cost of aging in America.
Healthcare & Medicare Costs
Health care remains one of the largest and most unpredictable expenses in retirement. Even with Medicare, retirees still face rising premiums, out-of-pocket deductibles, coinsurance, copays, and services that Medicare does not fully cover.
For 2026, the Centers for Medicare & Medicaid Services announced that the standard Medicare Part B premium is $202.90 per month, and the annual Part B deductible is $283. That means a retiree will pay more than $2,400 a year in Part B premiums alone before accounting for prescriptions, supplemental coverage, dental care, vision care, hearing aids, or out-of-pocket medical bills.
Fidelity’s 2025 Retiree Health Care Cost Estimate found that a 65-year-old retiring today may need $172,500 in after-tax savings just to cover health care expenses. These estimates do not include every possible expense, such as long-term care, which can quickly overwhelm a retirement budget.
Health care costs also tend to increase with age. Retirees may begin retirement relatively healthy, but over time, chronic conditions, mobility issues, specialist visits, surgeries, and ongoing prescriptions can become a larger part of monthly spending. For retirees living on fixed incomes, even small increases in premiums or copays can force difficult choices. Retirees with conditions requiring specialty drugs, such as cancer or multiple sclerosis, can quickly rack up out-of-pocket costs.
Prescription Drugs
Prescription drug costs remain a major concern for retirees, especially those managing chronic illnesses or needing specialty medications. There has been some progress: Medicare Part D now includes an annual out-of-pocket cap, which limits what enrollees pay for covered prescription drugs once they reach it.
That is an important improvement, but it does not mean prescription costs have stopped being a burden. Many retirees still face monthly medication costs, plan premiums, formulary changes, prior authorization requirements, and drugs that may not be covered as they expect. For retirees with multiple prescriptions, even capped costs can take a significant bite out of a fixed income.
The larger point remains the same: retirees should not have to choose between filling a prescription and buying groceries, paying rent, or keeping the lights on.
Dental, Vision, and Hearing Care
Dental care is another major expense many retirees are forced to pay for out of pocket. Traditional Medicare does not cover most routine dental services, including cleanings, fillings, dentures, and many other common procedures. Medicare.gov states that Original Medicare does not cover most dental care, including routine cleanings, fillings, tooth extractions, or dentures. It also does not broadly cover routine vision or hearing care.
These are not optional needs. Poor oral health can affect nutrition, heart health, diabetes management, and overall quality of life. Vision problems can increase the risk of falls and isolation. Hearing loss can make it harder for older adults to communicate, stay socially connected, and maintain independence.
The problem is that these costs often show up exactly when retirees can least afford them. A crown, dentures, hearing aids, eyeglasses, or an unexpected dental procedure can cost anywhere from hundreds to thousands of dollars. For someone living on a fixed income, that can mean delaying care until the problem gets worse.
Long-term Care
About one in four seniors requires long-term care by the time they reach the age of 80. Yet, long-term care is one of the biggest retirement expenses that families often do not fully anticipate. Many retirees assume Medicare will cover long-term care, but it generally does not cover extended custodial care, such as help with bathing, dressing, eating, or daily living needs over a long period of time.
The cost of care is staggering. According to CareScout’s 2025 Cost of Care Survey, the national median cost of assisted living is $6,200 per month, or $74,400 per year. A semi-private room in a nursing home costs a national median of $315 per day, or $114,975 annually. A private nursing home room costs even more, with a national median of $129,575 per year. In-home care is also expensive, with non-medical caregiver services costing a national median of $35 per hour.
These costs can drain savings quickly. For retirees without a strong defined benefit pension income, substantial savings, family support, or long-term care insurance, the need for care can become a financial crisis. It can also affect spouses, adult children, and caregivers who may have to step in physically, emotionally, and financially.
A secure retirement is not only about having enough income at age 65. It is about having enough stability to withstand the realities of aging.
Housing Costs
Housing is another major pressure point that is too often left out of conversations about retirement. Even retirees who own their homes may still face property taxes, insurance, maintenance, utilities, repairs, accessibility modifications, and, in many cases, mortgage payments. Renters face even greater uncertainty as rents rise.
Harvard’s Joint Center for Housing Studies reported that in 2023, more than one-third of older households were cost-burdened, meaning they spent more than 30% of their income on housing. That represented over 12.4 million older households, a record high. More than half of those were severely over-extended, spending over 50% of their income on housing.
This matters because when housing consumes too much of a retiree’s income, less is left for food, medication, transportation, caregiving, and emergencies. For older renters in particular, rising housing costs can threaten stability and independence.
A secure pension can be the difference between stable housing and homelessness.
Inflation
Unlike the other expenses covered, inflation is an expense retirees can’t plan for, yet it’s one of the most significant expenses for retirees today. Costs of goods and services like gas, food, and clothing have spiked significantly, and though prices may rise and fall, retirees know that prices rarely return to where they were.
According to the U.S. Bureau of Labor Statistics, the Consumer Price Index rose 4.2% over the 12 months ending in May 2026. Energy costs increased by 23.5% over the year, gasoline rose by 40.5%, electricity increased by 5.9%, and shelter costs continued to rise. These categories matter because they are not luxuries. Retirees need groceries, utilities, transportation, medical care, and a safe place to live.
For retirees with automatic cost-of-living adjustments, inflation still hurts. For retirees without COLAs, or for those who have gone years without one, the impact is even more severe. A pension benefit that stays the same while prices rise loses purchasing power every year.
Making matters worse, the U.S dollar has been getting weaker, losing 10% of its value compared to other currencies since January 2025. A stronger dollar reduces the cost of imports, while a weaker dollar can increase costs for American households. A weaker dollar also increases costs for retirees spending time overseas, as more and more Americans are doing.
The Current Economy Makes Retirement Even Harder
Today’s economy adds another layer of uncertainty for retirees and near-retirees. Market volatility can reduce 401(k) balances just as workers are preparing to retire. Higher interest rates can make debt more expensive. Rising insurance costs, utility bills, and housing expenses can strain fixed incomes. Even when inflation slows, retirees are still paying today’s higher prices.
This is one of the clearest differences between a pension and a do-it-yourself retirement account. A 401(k)-style account places the risk on the worker. If the market drops near retirement, if someone lives longer than expected, if health care costs rise, or if inflation spikes, the individual bears the burden.
A defined benefit pension provides something different: a reliable monthly income for life. That stability is especially valuable during uncertain economic times.
Public Employees Earned Their Retirement
Too often, public employee pensions are framed as overly generous. That framing ignores reality. Public employees contribute to their pensions throughout their careers. Many accept lower wages than they might earn in the private sector because the promise of a secure retirement is part of their compensation.
It also ignores the fact that many public retirees are not wealthy. They are trying to pay bills, support families, manage health needs, and remain independent like everyone else.
A pension is not a bonus. It is deferred compensation. It is part of what workers earn through years of service to their communities.
Retirement Is Expensive—and Pensions Help Make It Possible
Retirement is expensive, and unless you’re rolling around in wealth—which most retirees are not—there’s nothing lavish about it. There is nothing lavish about struggling to keep up with health care costs, prescriptions, housing, utilities, dental care, long-term care, and inflation.
Retirees are not asking for luxury. They are asking for security. They want to afford their medications, stay in their homes, buy groceries, pay their bills, and age with dignity after a lifetime of work.
That is exactly what pensions help provide.
So the next time someone claims that retirees receive “too much” in retirement, remind them what retirement actually costs—or simply share this link and let the facts speak for themselves. Because a secure pension is not excessive, it is one of the most effective tools we have to ensure that the people who serve our communities can retire with stability, dignity, and peace of mind.