How Do I Figure Out What I’ll Really Spend in Retirement?
When people ask me, “How much do I need to retire?” the real question behind it is: “What will my life actually cost once I stop working?”
The truth is, figuring out retirement spending doesn’t start with a magic formula. It starts with looking closely at the life you live today — and the one you imagine for the future. That process is simpler than most people think, but it requires a willingness to pull out the numbers and see them for what they are.
Step 1: Look at today’s spending
The best predictor of your retirement lifestyle is how you spend money right now.
Begin by asking:
- What do I spend each month on housing, food, transportation, and healthcare?
- Which costs are essential versus optional?
- How consistent is my tracking — do I actually know what I spend?
This step may feel basic, but it’s powerful. Using credit card and bank statements to ground your answers in reality helps you “feel” the numbers, not just guess at them. If you need tools to make that easier, see 3 Alternatives to the “Mint” Budgeting App.
Step 2: Separate fixed and variable expenses
A simple but powerful way to think about money is to split your expenses into two buckets:
- Fixed expenses: Mortgage or rent, property taxes, insurance premiums, utilities, basic groceries. These are your non-negotiables — they don’t go away just because you retire.
- Variable expenses: Travel, dining out, hobbies, gifts, entertainment. These are the lifestyle choices that make retirement fun, and they can flex up or down depending on your circumstances.
To get a sense of balance between these categories, many clients also find the 50-30-20 Rule of Thumb helpful — it’s a quick way to compare essentials, lifestyle, and saving against what you’re currently spending.
Step 3: Ask what carries over into retirement
Not all expenses disappear when you stop working. Some shrink, some grow, and others surprise you.
Ask yourself:
- Will I still have a mortgage, or will the house be paid off?
- How will healthcare costs change once I’m on Medicare?
- Will I travel more — or spend less on commuting and work clothes?
- What new hobbies, family support, or giving might I want to add?
You don’t need perfect answers. Even rough estimates highlight what will stay the same, what will change, and what could catch you off guard.
Step 4: Don’t forget the surprises
Even the most careful planners underestimate certain costs:
- Healthcare and long-term care: Premiums, prescriptions, and in-home or assisted care can be significant. Genworth estimates median costs at $5,000–$10,000+ per month.
- Home maintenance: Roofs, HVAC systems, and other big-ticket repairs don’t vanish in retirement.
- Lifestyle creep: More time can mean more spending on hobbies, entertainment, or family experiences.
Step 5: Put it all together with a worksheet
After walking through these steps, the next move is to put your numbers in one place. A Retirement Spending Worksheet helps you:
- Capture today’s fixed and variable expenses.
- Decide which ones continue into retirement.
- Estimate how your costs shift — higher in some areas, lower in others.
- Create a simple snapshot you can revisit every year.
You don’t need perfect answers — even ballpark numbers bring clarity and confidence.
FAQ
Here are some of the most frequently asked questions I hear from clients — they’ll help you gauge if you’re on track as you work through this exercise with the worksheet.
Q: How much does the average retiree spend per month?
A: According to the U.S. Bureau of Labor Statistics, consumer units with a reference person aged 65 or older reported average annual expenditures of about $49,872 in 2020–2021. That works out to roughly $4,150/month.
Q: Will my expenses go down in retirement?
A: Some will (commuting, payroll taxes), but others rise (healthcare, hobbies, travel). That’s why separating fixed and variable expenses matters.
Q: How often should I update my plan?
A: At least once a year, or after big life changes such as paying off a mortgage or a health shift.
Q: What if I don’t know exact numbers?
A: Use ranges or estimates. Clarity, not perfection, is the goal.
Figuring out retirement spending starts with looking at today, separating fixed from variable, and asking which expenses carry forward. From there, you can begin to see your future life with more clarity.
At MainStreet, the clients we work with often find this exercise to be a turning point. What feels vague and overwhelming at first becomes tangible once the numbers are laid out side by side. And while the worksheet itself is simple, the act of doing it is where the real value lies. Pulling out credit card and bank statements, writing down real spending categories, and comparing them to what life might look like in retirement helps make the numbers real.
That’s exactly what the Retirement Spending Worksheet is designed to do — take your best guesses and your real numbers, and turn them into a snapshot you can build on with confidence.
Next step: Download our worksheet and sketch out your numbers. The moment you see them on paper, you’ll feel more in control of your retirement.
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