Estimating what retirement costs
Ask someone what they'll spend in retirement and you usually get one number: "about the same as now," or "$60,000 a year." A single flat number is easy to plan against — and wrong in three predictable ways.
1. Spending is not flat
Retirement spending tends to move through three phases:
- Go-go years — the active early stretch. Travel, projects, home improvements, eating out. For many households this is the highest-spending decade of their lives.
- Slow-go years — the pace eases. Less travel, fewer big outings. Discretionary spending drifts down.
- No-go years — closer to home. Discretionary spending is low, but medical and help-at-home costs climb, and for some households long-term care dominates.
A flat estimate overstates the quiet years and understates the active ones. A phased estimate is closer to how money actually goes out the door.
2. Big costs arrive in lumps
A roof. A car every ten or twelve years. A child's wedding. A once-in-a-lifetime trip. None of these fit a monthly budget line, and averaging them into one makes the yearly number look calmer than reality. They belong on a timeline of their own, landing in the specific years they happen.
3. The categories people forget
- Health care before 65. Retire early and you pay for your own insurance until Medicare — often the single largest new line for those years.
- Long-term care. Most people need some; it is expensive; it clusters late. Even a rough yearly reserve beats pretending it's zero.
- Where you live. State-to-state cost of living varies enough to move a total by a quarter or more. Splitting the year between two places — a few months in Portugal, say — changes housing, groceries, travel, and health coverage all at once.
- A cushion. Any category list like this misses things. A deliberate miscellaneous line is more honest than a tidy total.
Build your own
The retirement expense estimator does all of this: it asks a few questions, pre-fills every category with a benchmark you can edit, phases the spending, puts lumpy costs on a timeline, and lets you compare scenarios like "stay put" against "live abroad half the year."
See the About & methodology page for how these lessons and tools are built.