American Couples Should Count on Needing At Least This Much Money For Retirement Each Month

For a married couple approaching retirement, few things carry more significance than knowing how much income they’ll need to maintain financial stability and live comfortably after they stop working. Budgeting for retirement involves estimating your post-retirement income and calculating your essential and discretionary expenses. This approach helps you to avoid financial pitfalls and increases the chances your golden years will be enjoyable and worry-free. Here are practical, step-by-step instructions to create an effective retirement budget. Discussing your situation and objectives with a financial advisor will let you create a viable plan for a comfortable retirement.

Estimate Your Income

While budgeting always involves some uncertainty, one hard-and-fast rule is that your post-retirement spending plan must not exceed your post-retirement income. For most couples, Social Security will be an important part of that income. Many will also have income from investments and, less commonly, corporate or public pension benefits, annuities and part-time employment. Estimating income can be fairly straightforward, as shown in this example:

In 2023, the average retired worker got about $1,800 a month in Social Security retirement benefits. For a couple with similar earnings histories, that makes a total of $3,600 a month or $43,200 a year.

The average retirement savings for a person about to retire are approximately, $225,000, equal to $450,000 combined for a couple that has saved equally. Following the conservative rule of thumb and withdrawing 4% a year will provide this couple with another $1,500 monthly or $18,000 a year.

Combining these two sources of income gives this average couple a total of $5,100 per month or $61,200 in retirement income per year. Both amounts will be adjusted annually to reflect inflation and Social Security benefits will last their lifetimes, while their investment portfolio can reliably be…