The average retiree needs $50,000-$70,000 per year, requiring approximately $1.25M-$1.75M in savings for a 25-30 year retirement. Here’s how to calculate what you’ll need.
Average Retirement Spending
Category
Monthly
Annual
% of Budget
Housing
$1,500
$18,000
33%
Healthcare
$650
$7,800
14%
Food
$550
$6,600
12%
Transportation
$500
$6,000
11%
Utilities
$300
$3,600
7%
Entertainment
$300
$3,600
7%
Personal/misc
$350
$4,200
8%
Insurance
$200
$2,400
4%
Gifts/donations
$200
$2,400
4%
Total
$4,550
$54,600
100%
How Much You Need Saved
Using the 4% Rule
Annual Spending
Savings Needed (25×)
$40,000
$1,000,000
$50,000
$1,250,000
$60,000
$1,500,000
$70,000
$1,750,000
$80,000
$2,000,000
$100,000
$2,500,000
The 4% rule: Withdraw 4% of savings in year one, adjust for inflation each year.
Accounting for Social Security
Gross Need
SS Benefit
Savings Needed
$50,000
$20,000
$750,000
$60,000
$24,000
$900,000
$70,000
$28,000
$1,050,000
$80,000
$32,000
$1,200,000
Savings needed = (Annual need - Social Security) × 25
Retirement Spending by Age
Age Group
Average Annual Spending
65-74
$58,000
75-84
$52,000
85+
$46,000
Spending typically decreases with age (less travel, activity) but healthcare increases.
Retirement Cost by Location
Location Type
Annual Cost
Savings Needed
LCOL (Midwest/South)
$45,000
$1,125,000
Average US
$55,000
$1,375,000
HCOL (Coastal metros)
$75,000
$1,875,000
VHCOL (SF, NYC)
$95,000
$2,375,000
Healthcare Costs in Retirement
Expense
Annual Cost
Medicare Part B
$2,100
Medicare Part D
$500
Medigap/supplement
$2,000
Out-of-pocket
$2,500
Dental/vision
$1,200
Total
$8,300/year
Lifetime Healthcare Costs
A 65-year-old couple will spend approximately $315,000 on healthcare throughout retirement (Fidelity estimate).
Key Retirement Income Sources
Social Security Benefits (2026)
Work History
Monthly Benefit
Annual
Minimum (low earner)
$1,100
$13,200
Average
$1,900
$22,800
Above average
$2,700
$32,400
Maximum (age 70)
$4,873
$58,476
The 3-Legged Stool
Source
% of Retirement Income
Social Security
30-40%
Retirement savings
40-50%
Pension (if available)
10-20%
Part-time work
Variable
Retirement Savings Benchmarks
Age
Savings Target
If Earning $75K
If Earning $100K
30
1× salary
$75,000
$100,000
40
3× salary
$225,000
$300,000
50
6× salary
$450,000
$600,000
60
8× salary
$600,000
$800,000
67
10× salary
$750,000
$1,000,000
Safe Withdrawal Rates
Withdrawal Rate
Success Rate (30-yr)
Risk Level
3.0%
98%+
Very conservative
3.5%
96%
Conservative
4.0%
92%
Standard
4.5%
82%
Moderate risk
5.0%
70%
Higher risk
Lower withdrawal rate = money lasts longer but requires more savings.
Early Retirement Considerations
Retire At
Years in Retirement
Savings Multiplier
65
25-30
25×
60
30-35
30×
55
35-40
33×
50
40-45
35×
45
45-50
38×
Early retirement requires more savings and bridging before Medicare (65) and Social Security (62/67/70).
Housing Options in Retirement
Option
Monthly Cost
Considerations
Own (paid off)
$500-$1,000
Taxes, insurance, maintenance
Own (with mortgage)
$1,500-$3,000
Principal + taxes + insurance
Rent
$1,500-$2,500
No maintenance, no equity
Downsize
Varies
Free up home equity
Move to LCOL area
20-40% savings
Away from family
Long-Term Care Costs
Care Type
Monthly
Annual
In-home aide (part-time)
$3,000
$36,000
In-home aide (full-time)
$6,000
$72,000
Assisted living
$5,000
$60,000
Nursing home (semi-private)
$8,000
$96,000
Nursing home (private)
$9,500
$114,000
70% of people over 65 will need some long-term care.
Retirement Expense Changes
Expense
Retirement Change
Commuting
Eliminated
Work clothes
Reduced
Retirement contributions
Eliminated
Healthcare
Increased
Travel/leisure
Varies
Taxes
Often reduced
Insurance
Often reduced
Housing
May reduce (paid off)
The Replacement Ratio
What % of pre-retirement income you need:
Lifestyle
Replacement Ratio
Frugal
60-70%
Moderate
70-80%
Comfortable
80-90%
Maintain lifestyle
90-100%
Most people need 70-80% of pre-retirement income.
Tax Considerations
Income Source
Taxation
Social Security
0-85% taxable
Traditional 401(k)/IRA
100% taxable
Roth 401(k)/IRA
Tax-free
Pension
Mostly taxable
Investment gains
Capital gains rates
Rental income
Taxable
Mix of account types provides tax planning flexibility.
Retirement Readiness Checklist
☐ Calculate target number (25× annual expenses)
☐ Estimate Social Security benefit
☐ Plan for healthcare costs
☐ Consider long-term care insurance
☐ Understand pension options (if applicable)
☐ Plan debt payoff before retirement
☐ Diversify account types (pre-tax, Roth)
☐ Create retirement budget
Bottom Line
Metric
Amount
Average annual cost
$54,000
Healthcare (65+)
$8,000+/year
Savings needed (25-year retirement)
$1.1M-$1.5M
Social Security (average)
$23,000/year
Recommend savings target
10-12× salary
Key principles:
Save early — compound growth is powerful
Maximize employer 401(k) match
Plan for healthcare costs (biggest wildcard)
Consider location — geography matters
Delay Social Security if possible (8%/year increase)
Have multiple income sources
The “right” amount depends on your lifestyle goals, health, and location. Run your numbers with realistic assumptions.
WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy
