Estimating your retirement expenses can help you gauge the nest egg you’ll need.
Start with the basics but plan for nice-to-haves and big potential costs like long-term care.
Don’t forget inflation, local living costs and taxes, and income you expect outside your savings.

No matter where you are on the road to retirement, getting there is only half the journey. That’s because your retirement could last as long as your career—maybe longer if you expect (or you’re forced) to retire earlier than you’d planned. This means you may need enough income to fund 30 years (or more) of living once the regular paychecks stop.

That’s why it helps to know how much green you may need throughout your golden years. And while everyone’s situation is different, totaling up typical costs for the basic retirement expenses—from food to housing, transportation to health care—can put you on the starting line for estimating your own costs.

 

Road to retirement expenses

 

Our interactive Retirement-by-the-Numbers tool can help you determine how much money you may need to meet your expenses in retirement. It shows you the average couple’s monthly costs (before inflation) of key items for a retirement that lasts 20 years—but you can plug in your own numbers to reflect the lifestyle and location you want. This can give you a clearer picture of your destination…and what it may take to fund your retirement budget.

 

Use our tool as a starting point for understanding your cost of retirement. Don’t forget to add inflation (historically around 2% a year, though recently much higher) to your likely expenses. Make sure to account for possibly huge costs like long-term care. And factor in Social Security along with any other income you expect. Of course, retirement budgets and, especially, income strategies can be complicated. So, talk to a trusted financial professional about your circumstances, your goals and how to achieve them.

 

Prudential’s editorial team provides readers with valuable information on personal finances, retirement saving and planning for the unexpected.

 

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