13 Aug 2025 What Will You Spend in Retirement?

One of the most important pieces of a long-term financial plan, and often the hardest to predict, is what someone’s spending will look like in retirement. It seems relatively simple – just take what you are spending now and inflate it over time. Collective experience in the Beacon office over decades in the financial planning realm tells us it is never that easy.

Determining your spending number can have big ramifications on what your financial plan may look like. If you are planning on a number much higher than what you end up spending, you will likely end up with more money than you need. On the other end, if your number is too low then you may have unneeded stress in retirement. In light of spending being so important yet hard to predict, how should one plan for retirement spending? 

Start With Today

You have to start somewhere and the easiest starting point is considering what you are spending today in your pre-retirement years. If you use a budgeting software, this can be a relatively easy number to obtain. You can tally up your current expenses and come up with a good starting point number that you expect to spend in retirement.

If you don’t use a budget, it may take a few extra steps. For a lot of clients that we work with, they automate their savings (through their 401(k) or Schwab accounts) and charitable giving and then spend the rest. If you take this approach, you can think about your after taxes / savings amount as the number that you spend each month. Be careful to monitor if your current cash in checking / savings is increasing or decreasing over time because you may be spending more or less monthly because of those available dollars.

Make Adjustments

Making adjustments is the trickiest part of figuring out your retirement spending. For most people, pre-retirement life looks much different than retirement life. This has an impact on what you can expect to spend.

Will your mortgage be paid off by the time you retire? You can lower spending for your mortgage, but will still need to be aware of taxes, insurance, and maintenance. Will you need to provide for anyone else? If you will still be helping a child or another relative with living expenses, you need to decide on a number to plan for. Will you travel more in retirement? If so, it is helpful to have an idea of what you want vacations to look like in cost and frequency. 

It is helpful to think through the different goals you have and categories you spend the most money on and how those might be different pre-retirement vs in retirement.

Be Flexible

Or as Jared recently put it – more bendy, less breaky. We can account for every expense you may think you will have in retirement, but the likeliest outcome is that it will change. You may decide you want to travel more. You may decide you actually do want to change housing instead of aging in same place. You could receive an unexpected inheritance that changes your prior assumptions. The funnel of possibilities is wider the more years you need to plan for.

At Beacon, this is why we are here. We value spending and goals conversations in preparation for retirement and in retirement. We know that life changes and plans will need to be adjusted. As James Earle Jones once said in Field of Dreams, the one constant through all the years, Ray, has been baseball a financial plan that will change. While it may be hard to know what you will spend in retirement, if you start with where you are today, make reasonable adjustments based on what you know, and be flexible with potential changes, you will be in a much better position than if you didn’t take the time to consider spending. 

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