The Average Cost of Retirement

Online calculators can project retirement costs.

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No matter how happy people are in their jobs, many dream of the day they can retire and enjoy life without workplace pressures. Those dreams may be tinged with concern over whether they have saved enough to get comfortably through their retirement years. According to AARP, the average retirement age is presently 64 for men and 62 for women, yet only about 30 percent of households are projected to be ready for retirement at 62.

How Much

The U.S. Department of Labor estimates that a man who retires at the age of 65 can anticipate living an additional 17 years, while a woman could live another 20 years. The DOL projects that a retiree will need to replace between 70 and 90 percent of his before-retirement income. An employee who made $50,000 before taxes should expect to need between $35,000 and $45,000 every year to maintain the same lifestyle as he enjoyed before retiring. The DOL provides worksheets for calculating retirement assets, savings and expenses.


AARP describes the “three legs on the retirement stool” as Social Security, pensions and personal savings, but Social Security alone does not supply enough income for retirees to get by without other revenue sources. On average, Social Security provides just 40 percent of the income for people over 65. Waiting until age 70 to collect Social Security benefits will produce higher income than claiming benefits the first year of eligibility. The longer the wait, the higher the benefits. However, people over age 65 still need supplemental income from savings and other revenue. AARP provides a personalized calculator to help estimate Social Security benefits and recommend the best time to claim benefits.


Retirement cost can be expected to increase each year because of inflation and thus is difficult to predict with any degree of certainty. Social Security benefits are generally adjusted for cost of living increases, but again, that amount is not readily predictable. Likewise, income from investments and other savings can be estimated based on historical performance but is subject to market fluctuations. Expenses change as retirees age, reflecting lifestyle changes, living location and medical costs.


Online calculators can project retirement costs based on personal information input. The detailed CNNMoney calculator, for example, works out that a typical couple in their forties planning to retire at 65 would need $88,000 annually in retirement income, which, due to inflation, would equal $158,937 in the year 2032. Part of that income comes from Social Security, but the pair would have to boost their nest egg through a 401k, an IRA or other savings accounts to more than $844,941 by the time they are ready to retire. The calculator predicts a slim chance of that happening and recommends increasing annual savings to improve the plan.

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About the Author

As a long-time newspaper reporter and staff writer, Kay Bosworth covered real estate development and business for publications in northern New Jersey. Her extensive career included serving as editor of a business education magazine for the McGraw-Hill Book Company. The Kentucky native earned a BA from Transylvania University in Lexington.

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