What is a Good Monthly Income in Retirement?


By Louis Horkan
Reviewed by Nathan Kattner

Table Of Contents

    A common question among people approaching retirement is how much they will need to live comfortably. More precisely, they want to know what a good monthly income is in retirement.

    Whether you realize it or not, income planning is a major component of the retirement planning process.

    Back to the question, as with many things in life, there is no set answer. There are certain rules of thumb, which should get you in the ballpark, but they are more general in nature. Your particular situation can vary considerably, depending on many factors and variables.

    As such, and to help you answer your question, it’s good to look at the issue from a number of angles.

    We start with an examination of your expenses, both fixed and variable. Then we go over a couple of “rule of thumb” income comparisons that look at pre-retirement and post-retirement. Combined this should help answer your question.

    While this can be done on your own, it’s always a good idea to work with a retirement planner or financial advisor to ensure you’ve covered all the bases.

    To determine what a good retirement income might be for you, it’s important to look specifically at your scenario to determine what you will need to pay your bills and maintain a standard of living.

    This should start with an examination of your pre-retirement expenses. Doing so will ensure you have a good grasp of what will be needed each month and throughout the years when you retire.

    Doing so in conjunction with “rule of thumb” methods that compare pre-retirement to post-retirement income can give you a good working number and provide peace of mind when you’re trying to determine a good retirement income for yourself.

    What Are Your Expenses

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    When it comes to determining what will be a good income for you to strive for in retirement, you need to start with the expenses that you will likely have, given your life scenario, health, lifestyle, projected debt, recurrent bills, and more.

    To do so you are going to need to consider the type of person you are, ranging from frugal and/or a saver to someone who might be more of a spendthrift, in which case you definitely need to be honest and allow for extra monthly expenses.

    Ultimately, when you break everything down you want to end up with a realistic monthly amount based on your current and projected post-retirement expenses. Hopefully, that amount is less than the income you expect to rely on in retirement. Any amount of income in excess of your expenses becomes a cushion for savings and further investment.

    Examine Fixed and Variable Expenses

    When you take the time to examine your expenses, you will find they tend to fall into two major categories – fixed and variable.

    Fixed :

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    The fixed expenses of a household are those we have that tend to cost the same each month. Key fixed expenses include housing, transportation, utilities, insurance, property taxes, personal debt, and more.


    What you pay for housing, whether you own or rent, is likely your highest cost each month.

    According to the Bureau of Labor Statistics (BLS – 2022), housing comes in first with an average cost per family of $1,885 per month, which equates to 34 percent of a typical family’s monthly spending. Moreover, that amount equals nearly 30 percent of their monthly income. That is significant.

    Obviously, those who have paid off their mortgage are sitting in a much better position when it comes to fixed expenses in retirement, but they still have housing-related expenses, including their property taxes and homeowner association fees.

    Car Payment:

    You probably don’t buy a car each year or so, and if retired, probably want to consider minimizing auto debt altogether, but for many a financed vehicle is a reality, so it must be accounted for in your monthly fixed costs. The BLS estimates the average household will spend about 16 percent of its monthly budget on transportation costs.


    This is an area people often neglect to fully account for, but when combined, the various types of utility payments can add up to a significant amount of your income each month.

    At a minimum, when calculating your utilities each month be sure to include electricity (can include heating oil and/or natural gas), which varies widely based on where you live, the size of the housing unit, the number of people in the household, and more. For many they are heating in the winter and running air conditioning in the summer, just to be somewhat comfortable. Rising prices and inflation only add to the cost.

    In most homes, you will be responsible for paying the water bill, which can skyrocket if you have a lawn, plants, and other things requiring regular watering.

    A home phone, cable, internet, and mobile phones add up considerably as well, easily costing up to a couple of hundred dollars or more monthly.  You’ve also got garbage each month, although for many their homeowner’s property tax or rent will cover that expense.


    Think of a car, homeowners or renters insurance, life, disability/long-term care, and other types of coverage you pay for each month.

    Then there is health insurance, which is the biggest part of healthcare costs for many people in retirement. Even if you have Medicaid coverage, it often doesn’t cover everything, so there is the monthly cost of supplemental health insurance.

    In total, the BLS estimates that the average household spends 10 percent of their budget on their collective insurance costs each month.

    Other Debt:

    If you have accumulated personal debt you likely pay a portion of that each month. A big area for many people is credit card debt, which is never something good for any person, but especially so for people living on fixed incomes, such as retirees.

    There are also personal loans, home-equity lines of credit (separate from a mortgage payment), furniture or appliance financing, dental financing for major work you may have needed to be performed, student loans for grandkids, and more. Again, best not to take them into retirement, but if you have them you must account for them.


    If you take the same medication monthly and it costs the same then you should include it as a fixed expense. The same holds true for things like streaming services (think Prime, Netflix or HBO), gym memberships, and more. If they are monthly and cost the same, while they may be discretionary in nature, you should consider them a fixed expense.


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    When it comes to variable expenses, people often view them incorrectly, assuming they are discretionary, such as travel, playing golf, going to the movie, etc.

    In fact, they can be non-discretionary, such as eating, putting gas into your vehicle, going to the dentist, and much more. You really can’t live without them, but their costs tend to vary each month versus a fixed amount, such as your monthly mortgage payment.

    Food :

    According to the BLS, the average household will spend roughly 11 percent of the budget each month on food, with roughly 7 percent spent on groceries and 4 percent spent on restaurants and other food items prepared by someone else. Those percentages have increased significantly with inflation and will continue to do so over time.

    Sadly, a percentage of seniors are forced to cut back on food to try to cover shortfalls within their budget, which can affect their health, increase anxiety and diminish their happiness in retirement. Fact is you need to account for a food cost that will maintain good health.


    These are costs for transportation aside from your car payment. Think about repairs that are inevitable (especially as your car ages), scheduled maintenance, fueling your car up, and more. And for some, there are the costs of public transportation to consider.


    There are also separate expenses for healthcare that are variable. These can include occasional prescriptions, as well as non-prescription drugs, vitamins, treatments, and other things that you will pay for out of pocket. If you have to spend on them monthly you probably should count them among variable expenses.


    There are obviously many types of subcategories here, ranging from movies, theme parks, ball games, outdoor activities and hobbies, and much more. If you do them with regularity then you need to account for them as a discretionary spend within your budget. The BLS estimates that the average household spends roughly 5 percent of its monthly budget on the entertainment.


    There are numerous other discretionary categories to consider when considering your monthly expenses, including clothing, tolls and parking fees, personal care, home repairs, and many more.

    Outside of monthly expenses that are variable in cost, be sure to list those that aren’t necessarily monthly, such as vacations. You probably save a certain amount as you’re able to occasionally over the year. However, if you pay for them, especially big-ticket items such as vacations, you need to account for them.

    Do the Math

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    Once you’ve gone through the exercise of determining your monthly fixed and variable expenses, now you can get serious about determining what will be a good monthly income from all available sources in retirement.

    For some context, the BLS estimates that the typical family unit or household expense in 2021 was $5,577. That figure will surely have risen in 2022, given the rapid rise in inflation. Regarding income, the average household brought in $78,743 after tax or $6,562 per month.

    Doing the math, you can see that the average family will spend approx. 85 percent of their after-tax income on monthly expenses. Not the greatest margin to operate on, given the many surprises life can throw at us each year. But it at least gets the bills covered.

    In that sense, if you can cover your bills and have some left to continue saving and even investing, you should feel comfortable about retiring.

    Rule of Thumb Calculation

    Another way to determine a good retirement income is to look at your pre-retirement income. The AARP suggests that a good monthly retirement income approximates to 80 percent of what you brought in pre-tax before retiring, given your income tax MIGHT be lower and job-related expenses would have been eliminated.

    In general, most experts suggest a “rule of thumb” in which you’ll need 70- to 80 percent of your pre-retirement income to safely maintain your standard of living in retirement. For example, if your pre-retirement income was $100,000 annually, equating to $8,333 monthly, you would need $70,000 to $80,000 annually, or $5,833 to $6,667 monthly, to maintain your standard of living in retirement.


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    When planning for retirement there are all kinds of considerations, ranging from when to retire, how much to have saved, where you want to live, and much more.

    You’ll definitely want to be sure to consider your pre-retirement standard of living, saving and spending habits built up over the years, your health, goals for charity and giving, legacy, and much more.

    But before all of those things you need to be able to simply survive month-to-month, covering all your expenses. And you’ll likely need to do so for many years.

    To know what a good monthly income is for you personally, you need to go through the process of determining your monthly expenses and comparing them to what your expected retirement income will be.

    If there is a deficit, you might need to delay retirement or continue working in some fashion at least part-time or look at realistic ways to cut your expenses, such as lifestyle changes.

    Suppose instead the figure you come up with in terms of income exceeds expenses and still allows for unexpected issues, as well as additional savings and potential investment. In that case, you will know what a good retirement income is for you personally, which is what really matters.

    Don’t Fret…Give us a Call!

    To help in your quest to determine what is a good retirement income for you personally, especially given all the factors and variables, you should consider consulting with a financial planner or investment advisor.

    If you’d like we can review your situation and portfolio to help you determine what is a good retirement income for your personal scenario. And we can help you optimize a plan to meet your future needs and goals while at the same time providing peace of mind during your retirement years.

    If you’re ready to take the next step and talk to a team of financial advisors and retirement planners who put your interests first, Schedule a call today!

    Let Us Help You Achieve the Retirement You Deserve!

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