How Much Will I Need in Retirement? A Practical Guide to Building Your Budget
One of the biggest questions people ask as retirement approaches is simple but not always easy to answer: How much will I actually need? A retirement budget isn't about perfectly projecting every number — it's about understanding what your life will look like once work becomes optional, and what that life will realistically cost.
In this video, Roger Brooks of Strategic Investment Management walks through how to think about retirement spending, what tends to change, and why reviewing your plan regularly makes all the difference.
Video Summary
For most people approaching retirement, the question of how much money they'll need is both the most important and the hardest to answer. In this video, Roger Brooks of Strategic Investment Management offers a practical framework for building a retirement budget that reflects real life rather than just assumptions.
A good starting point is today's spending. From there, it helps to think through what will likely change. Some costs may go down in retirement — commuting costs and work-related expenses often drop. Others may go up — travel, healthcare, and home utility bills can all increase when more time is spent away from work.
Roger recommends separating expenses into two categories: fixed essentials and flexible discretionary costs. Housing, insurance, and healthcare tend to be fixed and non-negotiable. Travel, dining, and hobbies are more flexible and can be adjusted as circumstances change. Understanding that distinction becomes especially useful when markets shift or priorities evolve.
It also helps to think about retirement in phases. The early years — often the 60s — tend to be more active, with more travel and discretionary spending. Later phases may bring greater emphasis on healthcare and support needs. Planning for those transitions ahead of time can reduce financial surprises down the road.
Finally, Roger emphasizes that a retirement budget isn't a one-time document. It's a living plan that should be reviewed at least once a year or after major life changes. The goal isn't perfection — it's a plan that reflects real life and has room to adjust as things change.
Key Takeaways
- "How much will I need in retirement?" is one of the most important — and most personal — financial questions.
- Start with today's spending and adjust for what will change once work is no longer part of daily life.
- Some expenses may decrease in retirement (commuting, work-related costs); others may increase (travel, healthcare, home utilities).
- Separating fixed essential costs from flexible discretionary ones gives your plan more resilience.
- Thinking about retirement in phases — early, mid, and later years — helps account for shifting priorities and costs.
- Healthcare and support needs often become more prominent in later retirement years.
- A retirement budget is a living plan, not a one-time calculation — review it annually or after major life changes.
- The goal isn't a perfect budget — it's one that reflects real life and leaves room to adjust.
Frequently Asked Questions
How much money do I need to retire?
There's no single answer — it depends on your lifestyle, expected expenses, other income sources like Social Security or pensions, and how long you'll need your savings to last. Building a personalized retirement budget is a better starting point than relying on a rule of thumb.
What expenses should I plan for in retirement?
Start with your current spending and adjust for what will change. Common fixed costs include housing, insurance, and healthcare. Flexible costs might include travel, dining, hobbies, and other discretionary spending. Both categories matter, but they behave differently in your plan.
What is the difference between fixed and discretionary retirement expenses?
Fixed expenses are costs that remain relatively stable and are difficult to reduce — housing payments, insurance premiums, and healthcare fall into this category. Discretionary expenses, like travel or dining out, are more flexible and can be adjusted when needed.
Why do retirement expenses change over time?
Spending patterns in retirement tend to shift as you move through different phases of life. Early retirement is often more active and may involve more travel and discretionary spending. Later years may bring lower activity costs but higher healthcare and support expenses.
Should I plan for healthcare costs separately?
Yes. Healthcare is one area where costs can increase significantly as you age, and it often rises faster than general inflation. It's worth estimating healthcare expenses as its own line item rather than folding them into a general budget.
How often should I review my retirement budget?
At least once a year is a good starting point. You should also review your budget after major life changes — a health event, a move, a shift in family circumstances, or significant market changes can all affect what your budget needs to look like.
What does it mean to plan retirement in phases?
Rather than treating retirement as a single long stretch, planning in phases means acknowledging that your 60s, 70s, and 80s may look quite different. Each phase may bring different spending priorities, and building that into your plan from the start can reduce surprises.
What if I'm not sure my retirement budget is realistic?
Running through a few different scenarios — with different spending levels or different assumptions about healthcare costs or longevity — can help reveal where flexibility exists and where potential gaps might be. A financial advisor can help walk through those scenarios with you.
Is a retirement budget a one-time exercise?
No. A retirement budget is a living plan. Life changes, markets change, and priorities shift. Revisiting your budget regularly keeps it grounded in reality rather than outdated assumptions.
Expanded Transcript
Introduction
Hello, my name is Roger Brooks. I'm a financial advisor at Strategic Investment Management.
One of the biggest questions people ask as retirement approaches is simple but not always easy to answer: How much will I actually need in retirement?
What Retirement Budgeting Is Really About
Designing a retirement budget isn't about perfectly projecting every number. It's about understanding what your life will look like once work becomes optional — and what that life will realistically cost.
Start With Today
A good place to start is with today. Look at your current spending, then adjust for what will change in retirement.
Some expenses may drop, like commuting or work-related costs. Others may increase, like travel, healthcare, or higher utility bills from additional time spent at home.
Fixed vs. Flexible Expenses
It also helps to separate fixed and essential costs from flexible ones.
Housing, insurance, and healthcare tend to be fixed essentials. Things like travel, dining out, or hobbies can vary and are discretionary. That flexibility becomes especially important as markets, circumstances, and priorities shift.
Think in Phases
Many people find it useful to think of their retirement in phases. Your 60s may look very different from your 70s or 80s.
Early retirement often brings more activity and travel, while later years may place more emphasis on healthcare and support. Planning for those changes upfront can reduce surprises later.
Your Budget Is a Living Plan
Finally, remember that your budget isn't a one-time decision. It's a living plan. Reviewing it once a year or after major life changes can help keep it aligned with reality, not just assumptions.
Reach Out
A retirement budget doesn't need to be perfect — it just needs to reflect real life and leave room to adjust as things change.
Walking through a few scenarios can help clarify what matters most and where flexibility lives. When you're ready to explore that, reach out to the office to start the conversation.
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Ready to Build a Retirement Budget That Reflects Your Real Life?
A personalized retirement budget review can help you understand what your spending may look like in retirement, how to plan for changing costs over time, and where flexibility exists in your plan.