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Planning for retirement can be a daunting task. How much money will you need? What will your retirement spending look like? This article shows the expected annual retirement spending of Americans.
- The most commonly-cited expected spending amount is $60,000.
- Median spending, or the middle value when spending is ordered from lowest to highest, falls at $70,000.
- Average spending is a fair amount higher at $100,000 because the average is calculated by adding up all the expected retirement spending amounts and dividing by the total number of users.
Once you’ve determined how much you’ll spend in retirement, your next step will be to determine if your savings are on track. Below is the breakdown of one’s likely chance of success:
- The good news: more than half of people have an 80% or better chance of meeting their retirement spending goals. This means they have sufficient financial assets and are contributing enough, regularly enough, to meet their expected spending amount.
- The not so good news: one in five people has a less than 50% chance of meeting their goals.
- This problem is even more troublesome in the overall U.S. population where only 50% of people have a retirement account, and the Center for Retirement Research at Boston College estimates half of today’s workers are unprepared for retirement.
Your annual retirement spending will be very specific to you but most financial planners typically recommend that you should plan on needing 70-80% of your pre-retirement income in retirement as people generally no longer have certain expenses, such as commuting or childcare costs, when they retire. Keep in mind, however, that your expenses could be higher if you still have a mortgage, encounter unforeseen medical expenses, or want to splurge on things like travel when you retire…
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