“How much will retirement cost you? Let’s pick a number.” Experts project you might need 70 to 90 percent of your pre-retirement income. Before we settle on the high or low side, let’s see what we’re working with. Some of your expenses might drop after retirement … for example, clothing and lunches out. Others, such as for health care, can go up. Then there are the routine monthly costs you can’t escape, for example for utilities and food. Everything else is up to the individual.

Big-ticket items to consider:

• Housing – Are you staying put or relocating? Will you have a mortgage?
• College – Will your kids be through school or still on the dole? Are you going back to school?
• Credit cards – Will these be paid off, or up to the max?
• Travel – Will you take expensive vacations? Just at first or for many years?
• Hobbies – Will you be taking up costly hobbies?

Over the course of retirement, expenses will vary. At first, you may be a lot more active and spending more. In later years, you might stay closer to home … but need more for health care. So, it’s important to factor variability into how much you might need each year you’re retired.

“Hey. That’s a lot of pie!” Statistics say that, on average, retirees will spend about 30 percent of their income on health care by the year 2025. Better figure that in. Source: Urban Institute, 2002