How to estimate your retirement expenses
Start with a year of real spending
Pull twelve months of card and bank statements, not a single busy month. A 38-year-old couple spending $7,000 a month might discover that summer travel and back-to-school costs swing totals by hundreds of dollars. Count everything the household spends, including the mortgage and childcare, but leave out money you move into savings and taxes withheld from paychecks.
Remove costs that end before or at retirement
Commuting, work clothes, and lunches out often disappear when work stops. Childcare may end years earlier: in the worked example, $1,200 a month of kids' costs drops off at age 50. A $2,100 mortgage payment can end at 58 while property taxes and insurance stay in housing. Removing those lines shows what you might actually need once paychecks stop.
Add costs that start in retirement
If you might retire before 65, budget for health insurance until Medicare. The example uses $1,400 a month for premiums and out-of-pocket costs in those bridge years; after 65 it uses $600 a month for Medicare premiums and care. Early retirement often adds travel or hobbies too — $500 a month in the example until age 75.
Plan for spending that changes by phase
Many households spend more in the first active years of retirement, then ease everyday spending while health costs drift up. Rather than assuming a pattern, this calculator lets you set your own percentage change when a later phase starts. Health lines are not reduced automatically — you choose what everyday spending does.
List one-time costs
Roofs, cars, and home updates do not belong in monthly averages. Add them at the age you expect the bill, such as $25,000 at 62 and $35,000 at 70 in the example. They hit savings in that year only.
What goes in a retirement budget
Use the same eleven categories as the calculator's category mode. Income tax is a real retirement cost; this free tool does not model it, but the Meridary planner does.
- Housing
- Utilities
- Food
- Transportation
- Health care
- Insurance
- Travel and recreation
- Family and giving
- Personal
- Debt payments
- Other
Export your inputs and year-by-year rows from the result panel, or print this page as a worksheet.
How your spending moves your retirement date
A 38-year-old household spends $7,000 a month today, including a $2,100 mortgage that ends at 58 and $1,200 of childcare and kids' costs that end at 50. They save $40,000 a year on $250,000 invested, expect $30,000 a year of Social Security at 67, and budget $1,400 a month for health insurance before Medicare plus $500 a month of extra travel until 75. With a 6% return and 2.5% inflation, the calculator's earliest estimated retirement age is 53. Spending 10% less moves it to 51; 10% more moves it to 54. The retirement budget is not one number: about $7,300 a month in the first year, $5,200 once the mortgage is gone, and $4,400 from 65. These figures exclude taxes. (Illustrative household, not a recommendation.)
| Scenario | Earliest age |
|---|---|
| As entered | 53 |
| Spending −10% | 51 |
| Spending +10% | 54 |
| Spending −$500/month | 52 |
Retire one year later at 54 and about $942,000 could remain at 95 versus about $425,000 at 53, before taxes. Retiring at 52 fails at age 89 in this example. Figures are illustrative.
Rules of thumb: the 80% rule and the 4% rule (and what they miss)
The 80% rule suggests retirees need 70% to 80% of pre-retirement income. It is quick, but it assumes spending tracks pay. A household that saves heavily or will drop a mortgage may need far less; one retiring before Medicare may need more.
The 4% rule multiplies first-year portfolio spending by 25. In the worked example, first-year need of $87,600 implies $2.19 million — before taxes — even though spending falls after the mortgage ends at 58. Use rules of thumb as a sanity check, not a date. See how much you need to retire for a fuller picture.
How it's calculated
- Real return = (1 + return) ÷ (1 + inflation) − 1, in today's dollars.
- Build an annual budget at each age: start from today's spending, subtract work and kids' costs and the mortgage when each ends, add travel in early retirement, apply your phase changes, and add health costs and one-time items.
- Grow savings with contributions until the retirement age you test.
- Each retirement year, withdraw the gap between budget and Social Security or other income; fail if balance goes negative.
- Earliest retirement age is the first age up to 75 that never fails.
- Sensitivity reruns that search with ±10% spending, −$500/month, and one year later.
- The 4% shortcut shows first-year need × 25 for comparison only.
What this calculator does not cover
- Income tax.
- Market volatility and sequence-of-returns risk (see how simulations differ).
- More than one Social Security benefit or survivor benefits.
- Inflation differences by category.
- State of residence.
- Account types (traditional, Roth, taxable).
This calculator vs the Meridary planner
This page turns today's spending into a phased budget and a rough retirement age with no taxes or market paths. The planner adds federal tax, simulated returns, healthcare detail, and account types.
| This free calculator | Meridary planner | |
|---|---|---|
| Spending | Today's spending, adjusted by phase, debt payoff and one-time costs | Retirement spending you enter, in today's dollars |
| Taxes | Not calculated | Federal income tax plus one flat state rate |
| Market returns | One steady return | 1,000 simulated market paths (Monte Carlo) |
| Social Security | One benefit, your estimate | One benefit and its taxation |
| Health care | Your monthly estimates | Pre-Medicare marketplace premiums net of premium tax credit; Medicare IRMAA from 65 |
| RMDs and Roth conversions | Not modeled | Modeled |
| Two earners | Household spending only | Two-earner wages |
| House and mortgage | Payment drops at payoff age | Not modeled; enter spending after payoff |
| Accounts | One invested total | Traditional, Roth and taxable balances, entered manually |
| Price | Free, no signup | $149 founding price (one-time lifetime) or $12/month |
Frequently asked
- What is a retirement budget?
- A retirement budget is an estimate of what your household will spend each year once paychecks stop, in today's dollars. Start from what you spend now, remove costs that end with work, add the costs retirement brings, and expect the total to change across retirement. It is one of the inputs that most shapes when you could retire.
- How do I estimate retirement expenses in my 30s or 40s?
- Start with a year of current spending. Then remove what will end before or at retirement, such as childcare, a mortgage you will have paid off, commuting and the money you save. Add health insurance for any years before Medicare at 65, plus travel or hobbies. Treat it as a first pass and revisit it every year.
- How much do retirees spend per month?
- It varies widely by household. Government spending surveys publish averages by age, but averages blend frugal and high-spending households and say little about your own plan. Your spending history, adjusted for the costs that end and start in retirement, is a better starting point than any average.
- Is the 80% rule a good way to estimate retirement spending?
- It is a rough start. The rule says retirees need about 70% to 80% of pre-retirement income, but it assumes spending tracks pay. A household that saves a large share of income or will have paid off its mortgage may need much less; one retiring before Medicare may need more.
- How does retirement spending change my retirement date?
- Spending sets how much your savings must cover each year, so small changes can move the date by years. In this calculator's worked example, spending 10% less moves the estimated earliest retirement age from 53 to 51, and spending 10% more moves it to 54. Your result depends on your own inputs.
- Does this retirement budget calculator include taxes?
- No. It works in today's dollars and does not calculate income tax, so treat the result as optimistic if most of your savings are in traditional 401(k) or IRA accounts. The Meridary planner adds federal tax, a flat state rate, RMDs, Roth conversions and 1,000 simulated market paths.
- Should I budget for health insurance before Medicare?
- Yes, if you might retire before 65, when Medicare eligibility generally begins. Enter your estimated monthly premium and out-of-pocket costs for those years. Our ACA subsidy calculator can help you estimate the marketplace premium tax credit you might receive, which can lower the premium you pay.
- What are the best retirement budgeting tools?
- It depends on what you need. Worksheets such as Vanguard's list expense categories, full planners such as Boldin include budgeting inside a plan, and spreadsheets give full control. This free calculator turns a budget into an estimated retirement age, and Meridary's planner tests it with taxes and market uncertainty. Meridary does not link accounts.
- Do retirement expenses go down over time?
- Often, but not always. Work costs and some debts usually end, and spending on travel may ease with age, while health care costs tend to rise. Instead of assuming one pattern, this calculator lets you set your own spending change for later phases of retirement and see how it moves your date.