Where do you want to retire? Near mountains or the ocean? In another state? Picturing your retirement can be fun, and it can help you understand how much you need to save for the retirement you want.

Planning for retirement is a personal thing

Just Google “best places to retire,” and you’ll find lots of lists—but the best list is your own. Start by asking yourself which type of retirement you want. What do you want to do? How and where do you want to live? The lifestyle you choose will affect how much you’ll need to spend in retirement.

With expense-based income planning, you set personalized savings goals based on how you’d like to spend your retirement years and how much it might cost. The following are some of the bigger factors you’ll want to consider.

Lifestyle

Think of retirement as your reward for years of hard work. Now picture what that reward looks like. Maybe you’ll want to be part of a community geared to retirees, where you can socialize and make new connections. Or settle in somewhere quiet and relaxing—in the mountains, by a pond, or near the ocean. 

Activities: You may be thinking that you’ll have plenty of time for golf, tennis, or even pickle ball. But then again, perhaps being close to bike paths is more your speed. Would you like to spend time volunteering or taking classes? As you think about future activities, consider how much they’ll cost.  

Work: Even when you’ve retired, you may still want to work or maybe open a small business. Among current workers, 70% think they’ll work after they retire, although just 27% of retirees actually do.¹ As you plan your income and expenses in retirement, be realistic about how much money you’ll be able to earn—and for how long.

Real estate: Do you plan to downsize, spend more time at a vacation home, or move to a bigger house? Rural, suburban, or city setting? The type and cost of housing can vary widely by geography. Just take a look at typical home values for some Springfields across the United States, and you can see big differences.

Source: realtor.com, 7/21/22. This sample is for illustrative purposes only. 

Climate: Many retirees stay put. Others move across state lines. If you’d like a sunnier climate, will you split your time, so you’re somewhere cooler in the heat of the summer? Or will you stay put year-round, perhaps traveling periodically?

Family: How about your immediate family? If you’ll be taking care of grandkids or elderly parents, you’ll want to be close by; otherwise, a quick car trip or even a direct flight away may suit your needs. And if you won’t be living near family, you may want a home or vacation spot that has space for visitors.

Cost of living

Starting to visualize doing what you want to do in retirement is exciting, so be sure you’re planning and saving enough to make it happen. Having a formal plan can help you set your financial goals and keep you on track. 

Basic expenses: Once you have an idea of where you want to be, check out the cost of living and how it compares with where you are now. If you’re likely to eat out or go to the movies and theater, estimate those costs as well. 

Extra fees: Next, think about costs for anticipated travel or vacation properties. Consider memberships for fitness centers, golf clubs, or tennis courts you’d like to join. And don’t forget to count home maintenance costs to replace that roof or build that new addition you’ve been wishing for. While you’ll have new expenses in retirement, you’ll leave some behind, such as the costs of commuting and buying lunch each day.

Health: One cost you can’t afford to forget is healthcare. A 65-year-old couple today may need up to $361,000 in savings to help cover 90% of their medical expenses in retirement, depending on their health condition and required drug expenses.² As you think about where you’ll retire, the cost—and quality—of healthcare will vary. 

Taxes: If you’re thinking of moving, taxes can make a difference. Do the areas you’re considering charge taxes on everyday goods—and if so, how much? Some states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) don’t have income taxes, while others (New Hampshire and Tennessee) don’t tax earned wages, but the trade-off could be higher property taxes. If you’re a U.S. citizen living outside the United States, you’ll still need to file a tax return each year.

Picture your lifestyle in retirement and start planning today

Retirement is a chance to do what you want—so what do you want to do? Once you have a good idea of what your retirement will look like, think about the details that will make it just right and put together a plan that helps you achieve it. Our retirement pursuit worksheet can help you get started.

1 “2022 Retirement Confidence Survey Report Fact Sheet #2 Expectations about Retirement,” Employee Benefit Research Institute, April 2022. 2 "Projected Savings Medicare Beneficiaries Need for Health Expenses Spike in 2021," Employee Benefit Research Institute, January 2022.