Is there one right amount of retirement income?
No. The right amount depends on your spending, where you live, your health, your taxes and whether you are married. A personal budget is a better guide than any general rule.
Retirement income basics
How Much Retirement Income Do I Need?
Most people need enough monthly income to cover their essential bills, their lifestyle spending and a cushion for surprises. The best way to find your number is to list what you actually expect to spend each month in retirement, then compare it with the income you expect from Social Security, pensions and other sources. The difference is the amount your savings would need to provide.
Written and reviewed by Dan Hopwood, Retirement Income Specialist · Retirement Income Knowledge Center · Last reviewed
Start with spending, not a percentage
You may have heard that retirees need a set percentage of their working income. That can be a rough starting point, but your own budget is far more useful. Some costs go away in retirement, like commuting or saving for retirement itself. Others often grow, like healthcare and travel.
Look at your last year of bank and card statements. Then adjust for what you expect to change once you stop working.
Split your budget into two parts
Many retirees like to know that their essential spending is covered by dependable, recurring income. Lifestyle spending can then come from savings with more flexibility.
- Essential spending: housing, food, utilities, insurance, healthcare, taxes and transportation. These bills arrive whether markets are up or down.
- Lifestyle spending: travel, hobbies, dining out, gifts and helping family. These matter, but you can usually adjust them if needed.
A simple monthly example
Illustrative household
- Essential spending
- $4,200 / month
- Lifestyle spending
- $1,300 / month
- Total desired income
- $5,500 / month
- Expected Social Security (both spouses)
- $3,600 / month
- Monthly amount savings must supply
- $1,900 / month
Illustration only. The numbers are made up to show the math. Your spending, benefits and taxes will be different.
Don't forget taxes and rising prices
Withdrawals from tax-deferred accounts and part of your Social Security may be taxable, so the income you need before taxes can be higher than your spending. Prices also tend to rise over time, so a budget that works at 65 may fall short at 80 unless your income grows too.
Three ways to estimate your retirement income need
| Method | How it works | Main limit |
|---|---|---|
| Budget-based | Add up expected monthly bills and spending | Takes more effort to build |
| Percentage of pay | Uses a share of pre-retirement income | May not fit your actual spending |
| Essentials first | Covers must-pay bills, then adds wants | Needs a clear split of needs vs. wants |
Illustrative comparison for education only.
See your own monthly retirement income picture
Enter the income you want and the income you expect from Social Security, pensions and other sources. The calculator estimates any monthly gap in about two minutes.
Open the Retirement Income Gap CalculatorFree • Results on-screen right away • No email required
Common questions
Should I plan for spending to go down in retirement?
Some costs drop and others rise. Many people spend more on travel early in retirement and more on healthcare later. It is safer to plan for your real expected spending than to assume a big drop.
Where can I find my expected Social Security benefit?
The Social Security Administration offers personal benefit estimates through a my Social Security account on ssa.gov. Using your actual estimate makes any calculation much more accurate.
How do I figure out my retirement income gap?
Add up the monthly income you expect from Social Security, any pension and other recurring sources, then subtract it from the monthly amount you expect to spend. What is left is your gap, the part your savings would need to cover. A free income-gap calculator can do the math with your own numbers.
Is $1 million enough to retire at 65?
It depends on how much you spend, how much Social Security and pension income you will have, taxes and how long you live. The same balance can be plenty for one household and short for another. Comparing your expected spending with your guaranteed income is a more useful test than the balance alone.
How much do I need saved to get $3,000 or $4,000 a month in retirement?
It depends on how much of that amount Social Security or a pension already covers. Illustration only: if Social Security pays $2,000 a month and you want $4,000, savings need to provide about $2,000 a month, which is roughly $600,000 using a 4% withdrawal rate. Your real number depends on taxes, fees, returns and how long you live.
How much do I need saved for $5,000 or $6,000 a month in retirement?
Subtract your guaranteed income first, then size savings to the rest. Illustration only: a couple with $3,000 a month of Social Security who wants $6,000 needs about $3,000 a month from savings, or roughly $900,000 at a 4% withdrawal rate. This is a rough rule of thumb, not a promise that the money will last.
How much savings does it take to retire on $8,000 or $10,000 a month?
A lot less than you might think if Social Security and a pension cover a large share. Illustration only: someone wanting $10,000 a month with $5,000 from Social Security and a pension needs about $5,000 a month from savings, or roughly $1.5 million at a 4% withdrawal rate. Taxes can push the pre-tax amount higher.
Why do Social Security and a pension lower the amount I need to save?
Every dollar of steady income you already have is a dollar your savings do not have to produce. That is why an income-gap calculation starts with Social Security and pensions and only asks savings to cover what is left. A smaller gap means less pressure on your savings.
Authoritative sources
This page is educational and general in nature. RetirementLeverage™ and Retirement Planning Store, Inc. do not provide individualized investment, securities, tax, or legal advice; please consult a qualified tax professional or attorney about your own situation. Insurance products and services may not be available in every state, and any guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company.