What Is a Good Monthly Retirement Income?

Planning for your golden years is essential, but what’s considered a "good" monthly income for your retirement depends on your lifestyle and goals. While 80% of your income is a general guideline, here’s how to estimate retirement income for a more accurate number.

How much do you need to retire?

There’s no one-size-fits-all answer to this question because everyone’s needs are different.

A general rule of thumb is to aim to replace 80% of your preretirement income to maintain a similar standard of living.

However, your retirement income needs will depend on various factors, including life expectancy and desired lifestyle, as well as living expenses and health care costs.

Below, we’ll cover five steps that can help you determine the right retirement income for you.

How to estimate your retirement income needs

1. Review your current financial picture

Before you can plan for your future, you need to understand your present financial situation and how much you’ve already saved for retirement.

Common sources of retirement income and savings include:

• Retirement accounts, such as 401(k)s and individual retirement accounts (IRAs)
• Pensions
• Social Security benefits
• Interest and dividends
• Sources of rental income
• Certificates of deposit (CDs)
• Savings accounts

This is your starting point for estimating how much more you need to save to reach your ideal monthly retirement income. You’ll also need this information if you want to use a retirement income calculator. (See step 4.)

2. Determine your retirement goals

Understanding your goals is the key to your retirement planning. Your goals will shape the amount of income you’ll need for retirement.

When creating your retirement goals, consider these factors:

• Lifestyle goals: Do you plan to downsize to a smaller home or relocate to an area with a lower cost of living? Will you travel more or pursue hobbies and activities that require additional money?
• Work goals: Do you plan on working part time or starting a business to earn extra income during retirement?
• Legacy and family goals: Do you hope to leave an inheritance for family members? Are there charities or other organizations you’d like to support?

Your answers to these questions will help you calculate the retirement income needed for a comfortable lifestyle. Take time to think about your goals and the resources you’ll need.

Learn more: Retirement Statistics You Should Know in 2024

3. List your anticipated expenses

Next, create a detailed breakdown of your expected expenses during retirement. It’s important to be as accurate as possible because underestimating costs can lead to shortfalls down the road.

You can separate your expenses into two main categories:

Essential living expenses, or needs:

• Housing, such as mortgage or rent payments, property taxes and maintenance costs
• Utilities, including electricity or gas and water
• Groceries and household supplies
• Health care expenses, such as insurance premiums and prescriptions
• Transportation, including car payments and car maintenance expenses
• Other insurance premiums (car, life)
• Clothing and personal care items

Lifestyle expenses, or "wants":

• Travel costs and vacations
• Hobbies and recreational activities
• Dining out and entertainment
• Memberships, such as health clubs and subscriptions
• Gifts and donations
• Pet expenses, including food, grooming and veterinary care

Don’t forget to plan for unexpected costs, such as emergencies or home repairs. It’s a good idea to include a buffer in your retirement budget to handle life’s curveballs.

Also, factor in the cost of inflation, as prices typically rise over time. A common assumption is an annual inflation rate of 2% to 3%. Keep in mind that certain expenses, such as health care, may increase at a faster rate.

4. Use a retirement income calculator

A retirement income calculator is a valuable tool that can help you estimate your income needs and determine whether you’re on track.

To calculate your retirement income needs, you can use an online calculator, such as this one. You’ll need to input the following:

• Your current age and desired retirement age: The age you are now and the age you want to retire are the basis of the calculation.
• Existing savings and contributions: Include the amount you have saved for retirement, along with any monthly or annual contributions you make.
• Monthly retirement income: Estimate how much money you’ll need to cover all of your expenses. Some calculators will ask you to enter a dollar amount, while others may request a percentage of your preretirement income, such as 70% or 80%.
• Longevity: The longer you live, the more you’ll need to save to make sure you don’t outlast your money.

If your projected monthly income is lower than estimated expenses, consider increasing your retirement contributions, scaling back your expenses or delaying retirement by a few years.

5. Monitor your progress

Retirement planning isn’t a one-and-done activity. Your needs, goals and priorities will likely change over time, so it's important to review and adjust your plan as necessary.

Also, be sure to monitor your progress and make sure you’re on track. While some people handle their retirement planning on their own, many choose to work with a financial planner for personalized guidance.

Frequently asked questions

Is $4,000 a month a good retirement income?

A $4,000 monthly income can be enough for some retirees, especially those with fewer expenses or who live in a low-cost-of-living area. However, it’s important to consider your expenses, including housing, food and health care, to determine whether this amount will meet your needs.

What is considered a comfortable retirement income?

What qualifies as a “comfortable” retirement income depends on your goals and the lifestyle you want. For example, some retirees may prefer a simpler life, spending time with family and volunteering in their community. These retirees may need less income to feel comfortable than those who want to live a more extravagant lifestyle.

What is the average monthly Social Security check for a retiree?

The average Social Security benefits check for a retired worker is about $1,925 a month. This amount isn’t enough for most people to live comfortably, so it’s important to supplement it with savings from other sources, such as 401(k) plans and IRAs.