Calculating How Much You’ll Spend in Retirement, Ep #174

One of the biggest questions people have about retirement planning is: “Will I have enough saved?” This episode of Retirement Made Easy dives into just that—how to determine the “magic number” you’ll need to retire comfortably and securely. 

From evaluating your current expenses to assessing your future goals, we will start to cover all the bases to help you calculate your retirement needs with confidence.

Whether you’re thinking about traveling, leaving a legacy for your loved ones, or simply covering the basics, this episode offers practical steps to ensure your money lasts through retirement, no matter how long that might be.

Listen in to find out how to navigate expenses, balance risk, and prepare for a lasting retirement.

You will want to hear this episode if you are interested in…

  • [2:50] Get free resources at RetirementMadeEasyPodcast.com
  • [4:56] Look at your expenses, budget, and income
  • [12:04] What do you like to spend money on?
  • [14:42] How much will you need to save?
  • [18:35] Do you want to leave an inheritance?

Look at Your Expenses, Budget, and Income

What did you spend in the last year? What’s your monthly take-home pay? Are you spending more than you earn? Are you saving? Is your emergency fund in checking, savings, and money markets growing?

What will your income be in retirement? Will you work part-time? How much can you expect from Social Security, and how much of your budget will that cover?

Do you have a monthly pension? What about personal savings in accounts like a 401K? What income can you expect from these?

Think long-term: Jimmy Carter recently turned 100, reminding us that retirement could last 35 years or more. All the funds you’ve saved will need to sustain you over that time.

You may live modestly and rely on Social Security and pension checks. But even this comes with risks: Cost of Living Adjustments from Social Security may not be enough to keep pace with rising costs, meaning you might have to rely more on your savings as the years go by.

What Do You Like to Spend Money On?

Knowing your spending habits and how they’ll change in retirement is key. Here are some expenditures to consider:

  • Do you like to travel? Costs will continue to rise.
  • Do you prefer to drive a new car? The price of a new vehicle increases every year. I have a client who spent more on his last car than he did on his first house.
  • Do you own a second or vacation home? What are the maintenance costs?
  • Will you buy a boat, RV, or other large purchase? These must fit into your budget.
  • Will you help fund your grandkids’ education?
  • What will healthcare costs be in retirement? As baby boomers retire, these costs are climbing.

How Much Will You Need to Save?

Here’s the answer you’ve been waiting for: it depends.

For instance, if you plan to work part-time during the first 5–10 years of retirement, only withdrawing $1,000–$2,000 monthly from your savings, you won’t need as much set aside initially.

What is your risk tolerance? If you’re not comfortable with market volatility, you may need a larger savings cushion, as lower-risk investments often bring lower returns.

Do you want to leave an inheritance? If leaving a financial legacy is one of your goals, you’ll need to save more for retirement to ensure your money lasts for both your lifetime and beyond.

How much flexibility does your retirement plan have with spending? Will you adjust your discretionary expenses each year based on market performance?

Numerous factors impact how much you’ll need to save and spend. It’s up to you to dive into these numbers. Let’s get started in this episode.

 

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