Knowing how much to save for retirement is essential to financial stability and peace of mind in your golden years. Your spending is one of the biggest areas to evaluate when determining how much to save. Consider your current and future expenses and choose the lifestyle you want in retirement.

For example, if you plan to purchase property or travel more, you’ll probably need to save more before retiring. 

It’s not always possible to plan for everything that could happen in retirement, but you can prepare for most things with a little extra guidance. Here’s what to consider when you’re wondering how to estimate your retirement costs for the best outcome.

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What Experts Say

Planning for certain expenses may ease financial stress and help you enjoy retirement. Most retirement experts believe you can expect to spend between 55% and 80% of your annual working income once you retire. These expenses usually include housing, health care, entertainment, hobbies, and taxes.

It’s important to be aware of changes in expenses as well. For example, your transportation and housing costs may drop during retirement, but your health care and entertainment costs are likely to increase. Don’t overlook other expenses that may increase too – planning ahead for inflation is critical.

Determine Your Retirement Lifestyle

It’s important to focus on the habits, plans, and overall lifestyle you’d like to have in your retirement, especially early on, so you don’t run out of income as you age.

If you plan to travel in retirement, you’ll want to factor that into your planning. You’ll likely have significantly higher expenses than someone who prefers to stay home or focus on local free events in their community.

However, you may slow down as you age and prefer to do things closer to home.

Determining your desired lifestyle in retirement will help you more accurately plan and save for your golden years.

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Include Rising Health Care Costs

Despite the realities of getting older, many people underestimate their health care costs when planning their retirement. While you may be fortunate to enjoy good health early in retirement, your health care costs could increase as you age. Failing to plan for those costs may result in using money intended for other expenses, like hobbies or travel, which can impact your overall lifestyle. It’s always a good idea to save more than you might need.

Next Steps

Getting started on your retirement planning journey can seem daunting, but it doesn’t have to be. One way to create a strong financial plan for your retirement income and expenses is to check out our Retirement Planning Tools & Personalized Guidance. With financial planning tools and support, you can better understand your finances in retirement and have more peace of mind.

This blog is up to date as of February 2025 and has not been updated for changes in the law, administration, or current events. 

This information is intended to be educational. It is general in nature and should not be considered financial, legal, or tax advice. Consult an attorney or a tax professional regarding your specific situation.