In retirement, as in every other stage of life, high-income and low-income households tend to lead different existences. Yes, they all spend money on necessities like food, housing, and healthcare, but how much they spend and the proportion of their budgets that these necessities take up vary. This, in turn, affects the quality of one's retirement.

A recent Employee Benefit Retirement Institute (EBRI) study investigated the differences in retirement spending between high-income and low-income households, and it returned some interesting results. For the purpose of the study, it considered households to be high income or low income based on whether their income fell above or below the median income for their age range. This is $65,000 for adults aged 50 to 64, $49,000 for adults 65 to 74, and $30,000 for adults 75 and older.

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Low-income households spend more on basic necessities

The study found that low-income households tend to spend a larger proportion of their budgets on basic necessities, like housing, food, and healthcare. While housing only took up around 44.2% of the budget for high-income adults aged 50 to 64, it took up 47.3% for low-income households of the same age.

While both groups saw a slight dip in the percentage of their income spent on housing in the 65-to-74 age range, the difference becomes even more prominent as the two groups age. Among those 75 and older, high-income households only needed to devote 41.4% of their budget to housing, while low-income households spent 48.8% of their income on housing -- almost half of their budget.

Food spending tells a similar but less dramatic story. Low-income households spend about 12% to 13% of their budgets on food, while high-income households keep this percentage at just 9% to 10% of their overall spending. Interestingly, the percentage of income that high-income households spend on food actually rises over time, while low-income households spend a smaller proportion of their budgets on food as they age.

Low-income households actually spend less on healthcare during their younger years -- just 7.6% of annual spending for low-income households aged 50 to 64 compared to 8% for high-income households of the same age. But this trend quickly reverses for adults 65 to 74, when low-income households suddenly increase their healthcare spending to 10.8% of their annual spending, while high-income households only see a modest 0.2% increase.

Things even out a bit as both groups age even more, with low- and high-income households spending 10.4% and 10.9% on healthcare, respectively, once they're 75 or older. This makes sense, as people tend to develop more health problems as they age and must devote more funds to healthcare, regardless of income. Adults 65 and older spend three times as much on healthcare as their working-age counterparts, according to the Center for Medicare and Medicaid Services.

All told, low-income households spend close to 70% of their money just covering these three basic living expenses. High-income households spend closer to 62% on the same necessities.

High-income households spend more on gifts and entertainment

So what do high-income households spend their extra money on? Entertainment and gifts appear to account for a big part of that difference. While low-income households aged 50 to 64 only spend 8.4% of their average annual spending on entertainment, and this percentage steadily declines to a mere 6.5% by the time they're 75 or older, high-income households actually see their entertainment expenditures rise from 12.6% of their average annual spending when they're 50 to 64 to 13.4% when they're 65 to 74 before declining slightly as they age past 75.

Gifts and charitable contributions rise for both groups over time, but high-income households spend considerably more on them than low-income households. Low-income households in the 50-to-64 age group spent just 3% of their total budget on gifts and contributions, while high-income households of the same age spent 6.6% of their budget. Spending on gifts rises to 5% and 8.1%, respectively, as the groups reach their mid-70s.

The old adage tells us that money doesn't buy happiness, but it can certainly make a difference in the quality of your retirement. While low-income households seem to progressively tighten the belt on entertainment spending as they reserve their existing savings for their basic expenses, high-income households appear to spend more freely on leisure and gifts, suggesting a different experience of and outlook on retirement.

How you can cut costs on basic expenses in retirement

Low-income retirees who want to make more time for leisure and entertainment must bring some of their other living costs down to free up more cash. Housing is most people's largest expense, so cutting this back will save you quite a bit of money. You could explore downsizing or moving to a more affordable area. Homeowners should try to pay off their mortgages before retirement, if possible. Refinancing is also an option if you'd like to secure a lower monthly payment.

You may not have complete control over your healthcare costs, but taking steps to remain healthy as you age can improve your quality of life and minimize your healthcare spending. Once you're eligible for Medicare, take advantage of its free health and screening services, and consider purchasing supplemental insurance for things that Original Medicare doesn't cover, like dental insurance or hearing aids, so you don't have to pay for them out of your own pocket.

The above figures are averages. They don't reflect every individual case. A high-income individual who plans poorly and overspends on frivolous things could struggle to get by, while a low-income person who diligently saved for retirement and lives modestly might enjoy a comfortable retirement. If you want retirement to be a happy, exciting time in your life, begin planning for it now and look for ways to reduce your basic living expenses so you have more free cash for doing what you love.