Estimate Your Retirement Needs in 6 Steps






September, 2021
Presented by Laurence Hale, AAMA, CRPS®
Principal/Managing Partner & Chief Investment Officer

You know how important it is to plan for your retirement, but where do you begin? First, you’ll need to have an idea of how much income you'll need to fund the length and type of retirement lifestyle you want to live well. Your specific needs depend on your goals and many other factors.

Here’s a six-step process to help you answer this very important question so that you can plan well now, and live well in retirement.

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Step 1: Use your current income as a starting point

It's common to discuss desired annual retirement income as a percentage of your current income. Depending on whom you're talking to, that percentage could be anywhere from 60% to 90%, or even more.

The appeal of this approach lies in its simplicity: your current income sustains your present lifestyle, so taking that income and reducing it by a specific percentage to reflect the fact that there will be certain expenses you'll no longer be liable for (e.g., payroll taxes) will, theoretically, allow you to sustain your current lifestyle.

But bear in mind that this is a general benchmark, and you also have to take into account your specific plans. If you intend to travel extensively in retirement, for example, you might easily need 100% (or more) of your current income to get by. That leads us to step two…


Step 2: Project your retirement expenses

Your annual income during retirement should be enough (or more than enough) to meet your retirement expenses, so estimating those expenses is a big piece of the retirement planning puzzle. Some common retirement expenses to think about and estimate include:

  • basic needs, such as food, clothing and utilities
  • housing costs, including property taxes, homeowner’s insurance and repairs
  • transportation costs
  • insurance costs, including auto, medical, dental, life, disability and long-term care
  • health costs not covered by insurance, such as deductibles, copays and prescriptions
  • taxes
  • debts
  • gifts you’d like to make to others, such as charitable contributions and education funds for children or grandchildren
  • costs associated with the “living well” part of retirement, such as recreation, travel and other miscellaneous items

Don't forget that the cost of living will go up over time (the average annual rate of inflation over the past 20 years has been approximately 2%.1) and that your retirement expenses may change from year to year. To protect against these variables, build a comfortable cushion into your estimates.



Step 3: Decide when you'll retire

The longer your retirement, the more years of income you'll need to fund it. The length of your retirement will depend partly on when you plan to retire. This important decision typically revolves around your personal goals and financial situation.

For example, you may see yourself retiring at 50 to get the most out of your retirement. Although it's great if you have the flexibility to choose when you'll retire, it's important to remember that retiring at 50 will end up costing you a lot more than retiring at 65.


Step 4: Estimate your life expectancy

The age at which you retire isn't the only factor that determines how long you'll be retired. The other important factor is your lifespan. We all hope to live to an old age, but a longer life means you'll have even more years of retirement to fund. To prevent outliving your savings and other income sources, it’s important to estimate your life expectancy.

You can use our life expectancy calculator to get a reasonable estimate of how long you'll live based on your age, gender, race, health, lifestyle, occupation, and family history. This is just an estimate – there's no way to predict how long you'll actually live, of course. But it’s good to have an idea and then to assume you’ll probably live longer than you expect, given that life expectancies are on the rise.


Step 5: Identify your sources of retirement income

Once you have an idea of your retirement income needs, your next step is to assess what sources of retirement income will be available to you. You can likely count on Social Security to provide a portion of your retirement income. You can get an estimate of your Social Security benefits on the Social Security Administration website at But also think about what other sources of income you can expect to have.

Do you plan to work part time during retirement? Does your employer offer a traditional pension that will pay you monthly benefits? Do you have a 401(k), IRA or other retirement plan, annuities, or other investments? Getting a firm understanding of what you have (or don’t have) now will help you to identify how you can strengthen your retirement planning so you’re more likely to have what you need when the time comes.


Step 6: Make up any income shortfall

If you're lucky, your expected income sources will be more than enough to fund even a lengthy retirement. But what if it looks like you'll come up short? Don't panic — there are probably steps that you can take to bridge the gap, and a financial professional can help you figure out what options are available to you.


Now that you’ve gotten a start, work with a trusted partner to devise a strategic plan.

At Weiss, Hale and Zahansky Strategic Wealth Advisors we use our proprietary Plan Well, Invest Well, Live Well™ strategic process to help our clients plan well for retirement at every stage of life, so they can live well in retirement when the time comes. See how we can help you to build your own Plan Well, Invest Well, Live Well™ strategy now >



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 Presented by Principal/Managing Partner Laurence Hale, AAMS, CRPS®. Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2021. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860-928-2341.


1 Calculated form Consumer Price Index (CPI-U) data published by the Bureau of Labor Statistics, January 2021 



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