You understand the importance of planning for your retirement. But where do you begin? One of your first steps should be to estimate how much income you’ll need to fund your retirement. Since retirement planning is not an exact science, that can be a complicated process. However, by doing a little homework, you could be well on your way to a comfortable retirement.


It’s common to discuss desired annual retirement income as a percentage of your current income, which could be anywhere from 60% to 90% or even more.
The problem with this approach is that it doesn’t account for your specific situation. If you intend to travel extensively in retirement, for example, you might easily need 100% or more of your current income to get by. That’s why it’s worth going through all of your current expenses in detail and really deliberating about how those expenses might change as you transition into retirement.


Your annual income during retirement should be enough to meet your retirement expenses. But you may have difficulty identifying all of your expenses and projecting how much you’ll be spending in each area, especially if retirement is still far off.
To help you get started, consider these common retirement expenses:

  • Food and clothing
  • Housing: Rent or mortgage payments, property taxes, homeowners insurance, property upkeep and repairs
  • Utilities: Gas, electric, water, telephone, cable
  • Transportation: Car payments, auto insurance, gas, maintenance and repairs, public transportation
  • Insurance: Medical, dental, life, disability, long-term care
  • Healthcare costs not covered by insurance: Deductibles, copayments, prescription drugs
  • Taxes: Federal and state income tax, capital gains tax
  • Debts: Personal loans, business loans, credit card payments
  • Education: Children’s or grandchildren’s college expenses
  • Gifts: Charitable and personal
  • Savings and investments: Contributions to annuities and investment accounts
  • Recreation: Travel, dining out, hobbies, leisure activities
  • Care for yourself, your parents or others: Costs for a nursing home, home health aide or other type of assisted living
  • Miscellaneous: Personal grooming, pets, club memberships

Keep in mind that the cost of living may go up over time, and that your retirement expenses may change from year to year. For instance, you could pay off your home mortgage or children’s education early in retirement.
Other expenses, such as healthcare and insurance, may increase as you age. Protect against these variables by building a comfortable cushion into your estimates, and consider contacting a financial professional who can help ensure your calculations are as accurate and realistic as possible.


To determine your total retirement needs, you can’t just determine how much annual income you need. You also have to estimate how long you’ll be retired.

The longer your retirement, the more years of income you’ll need to fund it. For example, you may see yourself retiring at 50 to get the most out of your retirement. Maybe a booming stock market or generous early retirement package will make that possible. Although it’s great to have the flexibility to choose when you’ll retire, it’s important to remember that retiring at 50 will cost you a lot more than retiring at 65.


The age at which you retire isn’t the only factor that determines how long you’ll be retired. The other important factor is your life span. We all hope to live to an old age, although a longer life means that you’ll have even more years of retirement to fund. You could run the risk of outliving your savings and other income sources. To help guard against that risk, estimate your life expectancy using government statistics, life insurance tables or even a life expectancy calculator. While experts base these estimates on your age, gender, race, health, lifestyle, occupation and family history, they are still just estimates. There’s no way to predict how long you’ll actually live. But with life expectancies on the rise, it’s probably best to assume you’ll live longer than you expect.


Once you have an idea of your retirement income needs, your next step is to assess the sources of retirement income that will be available to you.
Your employer may offer a traditional pension that will pay you monthly benefits. You can also likely count on Social Security to provide a portion of your retirement income. Additional sources of retirement income may include a 401(k) or other retirement plan, IRAs, annuities and other investments. The amount of income you receive from those sources will depend on factors such as the amount you invest and rate of investment return. Finally, if you plan to work during retirement, your job earnings will serve as another source of income.

For an estimate of your Social Security benefits, visit the Social Security Administration website at and order a copy of your statement.


If you’re lucky and well-prepared, your expected income sources will be more than enough to fund even a lengthy retirement.
But what if it looks like you’ll come up short? Don’t panic – there are steps you can take to bridge the gap. A financial professional can help you figure out the best ways to do that, but here are a few suggestions:

  • Try cutting current expenses so you can save more for retirement
  • Shift your assets to investments that have the potential to outpace inflation (but keep in mind that investments with higher potential returns may involve greater risk of loss)
  • Manage your expectations for retirement so that you may not need as much money
  • Work part time during retirement for extra income
  • Consider delaying your retirement for a few years

Content prepared by Broadridge Investor Communication Solutions, Inc. This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The material is general in nature. Raymond James does not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional. Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value. Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. Raymond James Financial Services, Inc., member FINRA/SIPC. Raymond James® is a registered trademark of Raymond James Financial, Inc. 21-BDMKT-5037 KS 7/21