Two of the biggest questions I get about retirement are “How much do I have to save” and “Do I have enough?” But first we have to step back and answer the question “How much will I spend in retirement?” I recommend you map out your current cash flow, also called a budget, in detail. Spend some time envisioning the kind of lifestyle you want in retirement. Then make adjustments from your current cash flow to build a retirement budget.
Let’s start with income. Pull out your Leave and Earnings Statement and pay stubs. Military look for your total entitlements. Federal civilians look for your base pay plus locality pay . Working spouses and others use a recent pay stub. Jot down these sources of income.
Do the same for expenses. Look for deductions and allotments. Then list t other expenses you pay and categorize them. If possible use a year’s worth of expenses. If you don’t already keep a detailed list of expenses, now’s a good time to start. For now make an educated guess and begin logging your spending. A budgeting app like YNAB or Mint may help.
Now adjust your current expenses to estimate your retirement expenses. Here are some expenses that often change in retirement. Social Security and Medicare taxes are only withheld from money you earn through work. Retirement savings like the Thrift Savings Plan (TSP), 401(k) plans, and IRAs a will stop when you stop work. Drop these expenses from the retirement budget. Will your household living expenses like rent, utilities, income taxes, entertainment, charity, and travel? Adjust the budget.
If you pay off a mortgage, remember you still have to pay your property taxes and homeowners insurance. Will you downsize? Less expensive homes usually have lower property taxes, costs of insurance, utilities, and maintenance. If you want to buy a vacation home your total housing cost will go up.
Food and commuting costs often go down in retirement. Plan on traveling a lot or starting an expensive hobby? Add those higher expenses down in the budget.
Your healthcare costs are likely to go up. Tricare for military retirees is very reasonably. Get costs at https://tricare.mil/-/media/Files/TRICARE/Publications/Misc/Costs_Sheet_2021.pdf However, many military retirees are surprised once you reach age 65. You will be moved to Tricare for Life, which is free. But you are required to sign up for Medicare Parts A&B. Generally there's very little out of pocket expenses. But, you have to pay Medicare Part B premiums, which will be higher than your Tricare Prime or Select premiums were. https://www.medicare.gov/your-medicare-costs/part-b-costs
Federal retirees can carry FEHB into retirement. The premium you pay will be the same as working federal employees, but due to premium conversion you will pay more in taxes. For everyone else, your employer likely paying a large part of your premiums which will much higher if you stop work before Medicare kicks in at 65. Healthcare expenses like nursing home care are a wild card and can spike near the end of your life. Budget for that spike or for long term care insurance premiums.

Once you know what expenses you need to pay in retirement, you can begin planning how to have the income to cover it. Coming up short? The earlier you know this the better. You have time to adjust. You might decide to seek a higher paying job now to save more, retire later, or work part-time in retirement. It’s your retirement and planning early can help you have it your way. Would you like help answering your “Will I have enough?” questions? I love helping clients like you budget, plan, and save for the future you want. You can email me at katie@moneypilotadvisor.com