How Much Income Do You Need In Retirement?

Every individual is different when it comes to how much they’ll spend in retirement. The number is influenced by a variety of factors: lifestyle, age, health, earnings during their working years, the amount in savings and more. However, studies show that retirees should expect to spend between 55% and 80% annually of what they earned when they were working.4

Retiree Spending3
• 55% of retirees say their overall expenses are about what they expected
• 30% of retirees say their expenses are much higher or somewhat higher than expected

Most retirees tend to have the same five categories of expenses to consider:

Housing & Utilities

While your home equity value may fluctuate due to housing market prices, you should know if you will pay off your mortgage by the time you retire. You also should consider whether you plan to downsize to a smaller home — which may result in lower utility costs — or move into a retirement community.

Housing expenses may not decrease even after you pay off the mortgage. From a health care perspective, living in your own home may not always be an option if you become injured or ill and need assisted living or skilled nursing care. Additionally, you may find yourself in a situation where you or your spouse have medical issues requiring full-time nursing care, while the other spouse continues to live in the family home.

Whether it’s employing in-home services or entering a senior living facility, it’s important to understand the potential impact of these costs on your retirement savings. In any of these scenarios, a qualified financial professional can help you determine what residential options make sense financially.

Food, Clothing, Travel, Entertainment & Gifts

You need food and clothing before you retire — and you’ll need it in retirement, too. Overall spending in these categories tends to decrease slightly for people ages 65 and older, but the drop isn’t significant and probably won’t make a big difference in your overall budget.5


Your transportation needs may change as you get older. If you get to the point where driving is no longer comfortable or feasible, your transportation options may become more expensive. Of course, it’s also worth noting that you likely will not have auto payments, gas or insurance bills to pay.

Health Care

Health care expenses are a top concern for many pre-retirees and retirees, especially as medical costs continue to rise. Factors to consider when planning for health care expenses include insurance premiums, how much you will pay out-of-pocket for doctor’s visits and medical supplies, and even long-term care costs.

For many retirees, medical care is their biggest expense. A couple with both partners age 65 in 2019 could need up to $285,000 in today’s dollars to cover premiums for health insurance coverage and out-of- pocket expenses during retirement. That number doesn’t include any long-term care coverage.6

Maintenance Costs

Much like your car or home, many financial vehicles require “maintenance” fees or expenses. However, what many retirees may not realize is that even small differences in fees from one product to the next can translate into large differences in your asset accumulation over time. Your financial professional can help you identify fees — and explore ways to potentially reduce them.



Don’t go it alone!

Trying to figure out the best ways to make your money last in retirement isn’t always as straightforward as it sounds. It’s a good idea to speak with a financial professional who can give you an objective viewpoint on your retirement income strategy. Schedule an appointment with Don today to get started!



3 Greenwald & Associates, Employee Benefit Research Institute. “2019 Retirement Confidence Survey Summary Report.” pdf?sfvrsn=85543f2f_4. Accessed Feb. 14, 2020.

4 Fidelity. April 9, 2019. “How much will you spend in retirement?” retirement/spending-in-retirement. Accessed Feb. 14, 2020.

5 Fidelity. April 9, 2019. “How much will you spend in retirement?” retirement/spending-in-retirement. Accessed Feb. 14, 2020.

6 Fidelity. April 1, 2019. “How to plan for rising health care costs.” personal-finance/plan-for-rising-health-care-costs. Accessed Feb. 14, 2020.

Any comments regarding guaranteed income streams refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. All annuity contract and rider guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are not a deposit of, nor are they insured by, any bank, the FDIC, NCUA or by any federal agency.

Please note that the information and opinions included herein from third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information
is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. None of the information contained herein shall constitute an offer to sell or solicit an offer to purchase an annuity.

Our firm is not affiliated with the U.S. government or any governmental agency.

This brochure is designed to provide general information on the subjects covered. It is not, however, intended to provide advice designed to meet the particular needs of an individual’s situation, nor is it intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. Please note that this agency and its representatives do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.

Content prepared by Advisors Excel.


  1. Elias Lopez on September 4, 2020 at 7:21 pm

    Great blog- one factor is added is in housing tend to be the highest expenses for retirees. Thinking ahead to where you can own your home or downsize is a great way to mitigate those costs.

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