The Income Calculation That Financial Planning Experts Recommend For Retirement

As you near retirement your planning goals often shift gradually from milestones centered on wealth accumulation to a rebalancing act that places distributions at the forefront. Throughout your working life, you'll save up money in an effort to build a robust and resilient drawdown capability later on. The addition of compounding interest from your investments can make the withdrawal phase of retirement planning something beyond a straightforward pay in and take out relationship. Instead, your principal will continue to work for you, protecting the value of your nest egg even as you start using it to fund your retirement lifestyle. There can be a lot to consider when making this transition, and the lifestyle you hope to lead during retirement should absolutely one of those things. 

When it comes to knowing what a good retirement income is, many retirement experts suggest budgeting for around 75% of your pre-retirement income. However, lifestyle expectations can complicate this figure. While the concept of having 'enough' during retirement is deeply personal, a good starting point can include knowing the typical figures of other retirees in the U.S. For example, the median retirement income for an individual retiree is roughly $3,900 per month, per an analysis from Towerpoint Wealth. Using the 75% calculation, this would equate to a pre-retirement monthly income of about $5,200 (or $62,400 annually). However, as of Q2 2025, the median American wage for full-time workers between the ages of 55 and 64 was nearly $68,000, per the Bureau of Labor Statistics – meaning that the national median retirement income figure does not necessarily serve as the retirement income number to emulate.

Minimizing the expenses you carry into retirement can be crucial. For example, the average American pays $1,237 every month to service their ongoing debts, per Experian. This can involve interrogating your finances and personal habits to understand what elements need to be prioritized. You might be someone who loves playing golf, meaning that maintaining a club membership is something you aren't willing to give up. However, this might mean scaling down something else in your budget, like visits to your favorite restaurants or even your vacation fund.

The best retirement income figure to aim for is the one that can sustain all of your most pressing desires without an unacceptable level of sacrifice. It's also one that takes into consideration the reality that surprises will still creep into the picture. For instance, you'll still want to maintain or even add to your emergency fund. If you're a median earner, starting with the 75% figure can be a decent guidepost. However, your personal demands might see that figure shift, and potentially by a lot. Plus, it can also important to explore just how much you can expect to receive in Social Security benefits to supplement your income. Also, remember that even at a conservative 4% drawdown rate, you will still need considerable savings to last for a 30-year retirement.