Retirees and future retirees have one big question: Which will last longer -- me or my portfolio? The answer depends on many factors, including your asset allocation, your withdrawal rate, your other sources of income, and your health -- topics I regularly discuss in my Rule Your Retirement newsletter.

But there's also the question of how much you'll need from your portfolio, Social Security, pension, and online accordion lesson business ( In financial planning circles, this is known as "replacement income," and you've probably heard that you'll need approximately 70% of your pre-retirement paycheck to keep you in the lifestyle to which you're accustomed.

But is that true? Will it be enough to pay for your cross-country jaunts and your surgically replaced joints?

To answer that question, let's see what real retirees do. The good folks at the U.S. Census Bureau ("You're more than a number... except to us") collect household income and spending data every year, and publish the national averages in the riveting Consumer Expenditure Survey. The information is broken down into many categories, including by age. I've put some of the highlights for 2002 (the most recent data available) in the chart below.

Avg. Household 45-54 55-64 65-74 75 and Over
Income before taxes $64,974 $53,162 $35,118 $23,890
Annual expenditures 48,748 44,330 32,243 23,759
Food at home 3,528 3,114 2,877 2,195
Food away from home 2,700 2,445 1,602 1,107
Housing 15,476 13,831 10,052 8,257
Apparel and services 2,029 1,791 1,252 674
Transportation 9,173 8,449 5,731 3,178
Health care 2,550 3,007 3,588 3,584
Entertainment 2,565 2,297 1,371 896
Insurance and pensions 5,323 4,838 1,853 696
Personal taxes 4,051 2,856 1,556 479

Now, let's see what all this taxes-provided research can teach us.

Income before taxes. Wow, look at that drop-off. If you're in your late 40s or early 50s, enjoy it while you have it, since it seems those are the peak earning years. Perhaps most shocking is that the average household led by someone 75 or older lives on $23,890 a year. Is that due to an inability to do part-time work, or depleted savings? The survey doesn't say, but my guess is both. According to some studies, more than half of the people who retire do so because they have to due to health reasons, not because they want to. But don't tell that to my mother-in-law -- she's 76 and runs her own bookshop on Chincoteague Island.

Average expenditures. Notice that there's a $16,226 gap between the income and the expenditures of the average household headed by 45- to 54-year-olds. That gap serves as extra reserves that could pay for unforeseen large expenses. Now, notice that those gaps are $2,875 and $131 for the older age groups, respectively. That's not much of a cushion. A failed jalopy, damage from a string of hurricanes, or out-of-pocket medical expenses could easily cause expenditures to exceed income.

Food. Keep in mind that these numbers are by household, and the average household led by someone in the 45-54 group has 2.7 people, whereas the 75 and over household has just 1.5. So that's the biggest reason why food expenditures declined. But notice that at-home food declined by 38% from the youngest group to the oldest, yet dining-out expenses declined 59%. What will that mean for the future of restaurants such as Outback Steakhouse (NYSE:OSI)? Will McDonald's (NYSE:MCD) benefit as diners seek cheaper options?

Housing. The kids are grown, so there's no need to maintain a four-bedroom house with a playroom in the basement. Also, older folks are more likely to have paid off their mortgages. According to the survey, average annual mortgage costs dropped from $4,061 for the 45-54 crowd to $408 for those 75 and older.

Apparel and services. A big 67% drop in this category. Again, it's partially explained by having fewer bodies in the house to clothe. But it's probably also the result of no longer having to maintain a work-related wardrobe.

Transportation. The costs of buying a vehicle drop more (about 72%) with older consumers than the costs of maintaining one (a 62% decline for gas and a 52% drop in repairs). The conclusion is that the more mature motorists don't drive as much -- partially because they no longer have a daily commute -- and thus don't have to replace their vehicles as often.

Health care. No surprise here -- expenses actually increase as we age. The average 75-and-over household spends 41% more than the average 45-54 household, even with fewer people under the roof. As the cost of health care keeps rising, this will prove to be the Achilles heel of many retirement plans.

Entertainment. This is a fuzzy category. It included admissions, pets, audio-visual equipment, and playgrounds (sadly, an expense that declines as people age). But people have different ideas of what constitutes "entertainment." Indeed, many people have told me that their expenses increased after they retired because the time they used to spend working was now filled with playing -- which can be expensive, depending on your toys. I couldn't find "travel" or "airfare" or "cruise" or "parachuting" in the Consumer Expenditure Survey. However, I can tell you that spending on alcohol declined 69%, while spending on books remained fairly constant. As a former English teacher, I am heartened.

Insurance and pensions. These expenditures dropped a whopping 87%. The main reason: Non-workers no longer have to pay Social Security taxes, which are considered an insurance expense. After all, those taxes are known as FICA taxes, named after the Federal Insurance Contributions Act. In the upcoming issue of Rule Your Retirement, I will discuss other ways retirees can reduce their insurance costs.

Personal taxes. This category saw the biggest decline from the 45-54 group to the 75-and-older group -- an 88% drop. That's because work-related income is taxed at a higher rate than many forms of retirement income, such as capital gains and Social Security. Plus, most retirees are in lower tax brackets.

What does this mean for you?
I started this column mentioning your portfolio, and I think these spending patterns will affect your investments. Since consumers drive two-thirds of the economy, I wonder what will happen as older folks -- who don't, or can't, spend as much -- make up a greater proportion of the population. What will happen to the revenues of Wal-Mart (NYSE:WMT) and Target (NYSE:TGT)? Will stores like Gap (NYSE:GPS) have to start marketing to grandmothers? Since medical expenses are the only category that rises as people age, should everyone just invest in Merck (NYSE:MRK) and Pfizer (NYSE:PFE)? It's something to consider -- a topic for a later column.

As for your spending, many expenses do drop in retirement as a natural consequence of not working, such as Social Security taxes, commuting costs, and wardrobe upkeep. As for other costs that are more discretionary, such as entertainment and dining out, I suspect those drop more out of necessity than choice. If your income is just $23,890 a year, something has to go.

Of course, these numbers are national averages. The important numbers are what you will spend in retirement. Look those categories over again. How much change do you expect? Do you think your entertainment budget will drop 65%? Do you want it to? Knowing exactly how much you will spend and comparing it to the income you expect will answer the question of whether you're ready to retire.

Robert Brokamp is the editor of the Motley Fool Rule Your Retirement newsletter service. Order it today and receive the "8 Ways to Supercharge Your Retirement" special report free. The Motley Fool is Fools writing for Fools.