Retirement Example
Retirement Budget — What Does Retirement Actually Cost?
Realistic retirement expense breakdown and how to plan for healthcare, housing, and inflation.
Scenario
Average US retired couple. Annual expenses breakdown.
Inputs
SubjectsRetired couple, age 65, modest lifestyle
Results
Housing (mortgage-free)$12,000/year
Healthcare (Medicare + out-of-pocket)$9,000/year
Food$7,200/year
Transportation$5,400/year
Other (travel, entertainment)$6,400/year
Total~$40,000/year
Explanation
A modest retirement couple might spend $40k/year — consistent with $1M at the 4% rule. Healthcare is the wildcard: it tends to grow faster than general inflation. Being mortgage-free dramatically reduces expenses.
Key Takeaways
- Factor in one-time large expenses: car replacement every 10 years, medical events.
- Long-term care insurance (for ages 60–65) can protect against the biggest retirement risk.