You know how important it is to plan for retirement—but figuring out where to start can feel overwhelming. One of the best first steps is estimating how much you’ll need to spend each year once you stop working. That way, you can build a savings strategy that supports your lifestyle and long-term goals.

Retirement planning isn’t one-size-fits-all. Your needs will depend on your personal goals, expected expenses, and the age you plan to retire. Let’s walk through the key factors to help you estimate your retirement income needs and plan with confidence.

Use Your Current Income as a Benchmark

A common rule of thumb is that you’ll need at least 60% to 90% of your pre-retirement income to maintain your current lifestyle. This accounts for fewer work-related costs and potentially lower taxes, but it’s just a starting point.

If you expect to travel more, relocate, or pursue new hobbies in retirement, you may need 100% (or more) of your current income. Review your actual spending habits now and think about what may change—and what might stay the same.

Estimate Your Future Expenses

Your retirement income will need to cover all your basic and discretionary spending. Here’s a list of common expenses to plan for:

• Housing: Rent or mortgage, property taxes, insurance, and maintenance
• Utilities: Electricity, water, internet, heating and cooling
• Food and household needs
• Transportation: Car payments, gas, insurance, maintenance, public transit
• Healthcare: Premiums, co-pays, deductibles, prescriptions, and long-term care
• Insurance: Medical, dental, life, and long-term care insurance
• Taxes: Federal and state income taxes, capital gains, and property tax
• Debt payments: Loans, credit cards, or lines of credit
• Family support: Adult children or grandchildren
• Leisure: Travel, dining, hobbies, entertainment
• Unexpected costs: Emergency repairs, health surprises, or caregiving needs

Don’t forget to factor in inflation, especially for categories like healthcare. While inflation varies, the historical average has been around 2% per year—but some costs may rise faster.

Decide When You Want to Retire

The age you choose to retire plays a big role in how much you’ll need. Retiring at 62 instead of 67 could mean financing an extra five years of expenses—plus reduced Social Security benefits.

Delaying retirement gives your savings more time to grow and shortens the number of years your nest egg needs to last. It may also boost your Social Security income and reduce the risk of outliving your money.

Estimate Your Life Expectancy

No one knows exactly how long they’ll live, but planning for a longer life can help you avoid running out of money. Use online life expectancy calculators or consider family health history and lifestyle factors to make an informed estimate.

Planning for at least 30 years in retirement is a good rule of thumb, especially if you retire in your early or mid-60s.

Identify Your Income Sources

Once you have a sense of your expenses, list out all your expected sources of retirement income, such as:

• Social Security benefits
• Employer pensions
• 401(k), 403(b), or IRA withdrawals
• Taxable brokerage account income
• Annuities or rental income
• Part-time or consulting work

Use the Social Security Administration’s calculator to estimate your benefits and review your investment accounts to see what income they may generate.

Bridge Any Income Gaps

If your projected income doesn’t quite meet your estimated expenses, don’t panic—there are ways to close the gap:

• Delay retirement to save more and boost Social Security benefits
• Increase your current savings rate
• Reevaluate your investment strategy to ensure it aligns with your timeline and goals
• Consider part-time work during retirement for supplemental income
• Adjust your retirement lifestyle expectations or planned spending

Even small tweaks—like lowering monthly expenses or contributing more to a retirement account—can add up over time.

Revisit Your Plan Regularly

Life changes, and so should your retirement plan. Reevaluate your savings strategy and retirement timeline at least once a year or after major life events. Make sure your plan still aligns with your current situation, priorities, and market conditions.

A Clearer Path to Retirement

Planning for retirement doesn’t need to feel confusing or intimidating. With the right tools and support, you can make informed decisions and feel more confident about your financial future.

At Navalign Wealth Partners, we specialize in helping individuals create tailored retirement plans that reflect their values, goals, and unique lifestyles. Whether you’re decades away from retirement or already approaching that milestone, we’re here to help you feel prepared.

Not sure if your plan is on track? Reach out to Navalign Wealth Partners today—we’ll help you build a retirement strategy that works for you.