What is a Good Monthly Retirement Income? A Comprehensive Guide to Planning Your Golden Years

Terry Selb
3 min readSep 7, 2023

Retirement is a milestone that most of us look forward to, imagining days of leisure and freedom from the 9-to-5 grind. Yet, behind the tranquil scenes of sunset walks and time spent with loved ones lies an important question: How much money do you need to sustain a comfortable lifestyle once the regular paychecks stop coming in? Identifying what constitutes a “good” monthly retirement income is pivotal for making informed financial choices today that will pave the way for a secure future.

Factors Influencing ‘Good’ Retirement Income

Cost of Living

The first thing to consider is the cost of living in the area where you plan to retire. Your monthly expenses can vary widely based on geographic location. For example, living in an urban area is generally more expensive than living in a rural setting.

Health Care Costs

Health care is another significant factor, especially as you age. According to Fidelity’s estimates, the average couple may spend approximately $300,000 on healthcare during retirement. This does not even include the costs of long-term care, which can quickly deplete your savings.

Lifestyle Choices

What does your ideal retirement look like? If you plan to travel extensively, dine out regularly, or maintain an expensive hobby, your monthly income needs will be higher than someone who intends to live more frugally.


Finally, inflation is the silent enemy of retirement savings. The purchasing power of your retirement income is likely to decrease over time due to inflation, so your planning should account for this.

Sources of Retirement Income

Traditionally, financial advisors have spoken of the “three-legged stool” of retirement income: Social Security, pensions, and personal savings. However, this stool often has a fourth leg in the modern age — ongoing employment, rental income, or other forms of additional cash flow. Each of these sources will contribute to your total monthly retirement income.

Social Security

On average, Social Security benefits replace about 40% of pre-retirement income. However, this can vary depending on your earnings history and when you begin taking benefits.

Pension and Annuities

If you’re lucky enough to have a defined-benefit pension plan from your employer, this can provide a stable source of income. Annuities are another option: you can purchase a regular income stream using a lump sum.

Personal Savings

These come from 401(k)s, IRAs, or other investment accounts. The general recommendation is to withdraw at most 4% of your portfolio each year to minimize the risk of outliving your savings.

Additional Income

Many retirees find part-time work, consulting, or even small businesses to supplement their income. Rental properties or dividends from investments can also be part of this category.

How Much is ‘Good’?

Various rules of thumb can be applied to answer this question. The most popular is to aim for a retirement income of approximately 70–80% of your pre-retirement income. For instance, if earning $100,000 a year before retiring, aim for at least $70,000 to $80,000 in annual retirement income.

That said, this figure may be adjusted based on the factors discussed above. If your mortgage will be paid off and your children are financially independent by the time you retire, you may be comfortable with a lower percentage. Conversely, if you plan to lead an active, travel-filled life post-retirement, you may require more than 80%.

Adjust and Review

Your needs and circumstances are not static, and your retirement plan shouldn’t be either. Regularly reviewing your financial goals and objectives will help you adjust as needed. Remember to include your spouse or partner in these discussions and planning; after all, retirement is a stage in life that you’ll likely share.

Determining a ‘good’ monthly retirement income is a complex task that involves multiple factors, such as the cost of living, healthcare expenses, lifestyle choices, and potential sources of revenue. While the 70–80% rule provides a valuable baseline, individual circumstances can significantly influence your specific needs. A trusted financial advisor can offer tailored guidance, helping you navigate the intricacies of retirement planning.

Remember, the best time to plan for retirement is now. The more prepared you are, the more comfortable and secure your golden years will be.



Terry Selb

Terry Selb is a senior partner in one of the fastest growing tax resolution companies in America.