Many Americans Plan To Retire on $1,500 or Less — Is This Realistic? (2024)

Many Americans Plan To Retire on $1,500 or Less — Is This Realistic? (1)

Retirement can provide a blank slate for you to construct the lifestyle you want, but many people underestimate the costs associated with this stage of life.

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While some costs can decrease, such as if you’ve finished paying off your mortgage by then, others can increase, such as if you want to travel more, entertain hobbies, try new foods, etc.

To help you figure out whether you’ll be able to retire on $1,500 or less, GOBankingRates reached out to experts for their insights. Here’s what they had to say.

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Irregular Expenses

In the recent GOBankingRates retirement survey, 56% of Americans said they plan to live on $1,500 a month or less in retirement (aside from housing costs). Yet for many, this is an unrealistically low amount, especially when you consider irregular expenses.

“It feels like this amount would not provide enough cushion for the ‘what-ifs’ that could occur,” said Regina McCann Hess, certified divorce financial analyst, president and financial advisor at Forge Wealth Management.

For example, McCann Hess explained that while grocery costs can decrease with fewer people living in the house, healthcare expenses can be one of the largest retirement expenses.

“Many retirees get stuck in the ‘donut hole’ due to the medications while using Part D of Medicare,” she continued. “While you are in the donut hole, you are responsible to pay for up to 25% of your covered medications.”

According to McCann Hess, “In 2024, spending is capped at $8,000 for your covered drugs before you can leave the donut hole and move into the catastrophic phase. The good news is that in 2025, the out-of-pocket medication costs will be capped at $2,000. While this is a huge improvement, it is a good example of how medical costs can eat away at your budget.”

Long-term care costs can also eat away at your retirement budget and far exceed $1,500. For example, a home health aide costs over $6,000 per month on average, according to Genworth.

Check Out: How To Retire on $2,000 a Month: A Frugal Living Guide

Growing Your Nest Egg

Considering the risk of unexpected expenses blowing up your retirement budget, it can be helpful to plan for a larger nest egg. While this might seem like wishful thinking, there are manageable steps you can take pre-retirement to increase your retirement budget.

McCann Hess provided this example: “Every time you get a raise or bonus, increase your contribution percentage to your retirement plan. This is the easiest way to put more money away since it is not taking money out of your pocket that you are used to spending.”

You can also gain more retirement spending money by delaying Social Security benefits. Retirees can start receiving their benefits as soon as they turn 62 years old, but there can be long-term consequences to taking it as soon as you can.

McCann Hess warned, “Taking Social Security at age 62 can amount to a reduction of up to 30% of your benefit. This is a permanent reduction.”

Her advice? “To give yourself more spending money over your lifetime, you should minimally consider waiting until your full retirement age — 66-67 depending on your year of birth — to start your benefits,” suggested McCann Hess.

“Not to be greedy, but waiting until age 70 to collect Social Security could increase your benefit by up to 32%. This is important to consider since we are living longer and will need more money to fund our senior years,” she added.

Making the Most of Your Budget

While $1,500 might not be enough for non-housing retirement expenses for many people, it doesn’t mean it’s impossible to stick to this or other amounts, such as if you’re already retired and don’t have the ability to increase your budget.

But you need to carefully consider all your expenses and create a lifestyle that works for your budget. For some, that might mean finding low-cost yet fulfilling activities.

“There are many activities that you can do with little financial output,” said McCann Hess. “Many of my retired friends belong to Meetup groups that focus on group activities.”

These activities range from hiking in a local park and book clubs to trivia nights and mental wellness with peer-to-peer support groups.

“Participating in some of these activities can help in many ways. The most important of all, in my opinion, is to keep retirees active and social,” added McCann Hess. “Isolation tends to be a huge problem in the senior community. Participating in these types of groups can help decrease the impact of aging by yourself.”

Methodology: GOBankingRates surveyed 1,395 Americans aged 18 and older from across the country between Februrary 26 and February 28, 2024, asking twleve different questions: (1) Do you have a specific retirement savings goal?; (2) Will you need to work part time in retirement?; (3) In retirement, what type of housing/living situation would/do you you prefer?; (4) How important is/was proximity to family and friends in choosing a location to retire?; (5) Are you considering downsizing in retirement?; (6) Do you plan to or did you move for your retirement?; (7) Where is your ideal location for retirement?; (8) Which of the following will you consider/considered when deciding where to live in retirement? (Select all that apply); (9) What is the MOST important factor in deciding where you want to retire?; (10) What are you looking forward to in retirement?; (11) How much do you plan to spend monthly in retirement (outside of housing/rent)?; and (12) Which of the following countries would you be most interested in spending your retirement?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

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This article originally appeared on Many Americans Plan To Retire on $1,500 or Less — Is This Realistic?

Many Americans Plan To Retire on $1,500 or Less — Is This Realistic? (2024)


Many Americans Plan To Retire on $1,500 or Less — Is This Realistic? ›

In the recent GOBankingRates retirement survey, 56% of Americans said they plan to live on $1,500 a month or less in retirement (aside from housing costs). Yet for many, this is an unrealistically low amount, especially when you consider irregular expenses.

How much does the average American think they need to retire? ›

Key Takeaways. Adults in the U.S. believe they will need an average of $1.46 million to retire comfortably, a number trending considerably higher than the current inflation rate, according to findings from Northwestern Mutual's 2024 Planning & Progress Study.

How much does the average American spend in retirement? ›

According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month.

Do Americans say they need $1.2 million to retire most aren't saving enough? ›

It would take $1.46 million to retire comfortably, according to a recent survey of 4,588 adults released Tuesday by financial-services company Northwestern Mutual. That is up from $1.27 million a year ago. And over $1 million more than the average survey participant's nest egg.

Is $150 000 enough to retire? ›

How Can I Retire on $150,000? Most financial experts recommend saving $1 million for retirement and some might even bump that up to $2 million. Whether $150,000 is enough for you to retire or not is specific to your situation.

How much does the average 65 year old American have saved for retirement? ›

According to data from the Federal Reserve's most recent Survey of Consumer Finances, the average 65 to 74-year-old has a little over $426,000 saved.

What is a comfortable retirement income? ›

Financial planners often recommend replacing about 80% of your pre-retirement income to sustain the same lifestyle after you retire. This means that, if you earn $100,000 per year, you'd aim for at least $80,000 of income (in today's dollars) in retirement.

What is a realistic budget for retirement? ›

Expect to spend 55%–80% of your current income annually in retirement.

What is the biggest expense for most retirees? ›

Housing. Housing—which includes mortgage, rent, property tax, insurance, maintenance and repair costs—is the largest expense for retirees.

How much do most retirees live on per month? ›

The average American spends $4,345 per month in retirement, according to the Bureau of Labor Statistics. That's $52,141 per year.

Can I retire at 60 with $3 million dollars? ›

Summary. $3 million should be more than enough to fund your retirement, even if you choose to retire early. A number of factors are at play when determining how long $3 million will last, including your investment strategy and retirement lifestyle.

Can you retire $1.5 million comfortably? ›

Most retired Americans believe they will need nearly $1.5 million in the bank to retire comfortably, according to a new study. The majority of retirees surveyed believe that they will need $1.46 million in the bank to retire comfortably, according to Northwestern Mutual's 2024 Planning & Progress Study.

Is $6 million enough to retire at 65? ›

Retiring at age 65 with $6 million is entirely possible, even for people with quite comfortable lifestyles. Conservative investment and withdrawal plans allow for ample retirement income for most people retiring in those circ*mstances.

Is $500 000 enough to retire? ›

Most people in the U.S. retire with less than $1 million. $500,000 is a healthy nest egg to supplement Social Security and other income sources. Assuming a 4% withdrawal rate, $500,000 could provide $20,000/year of inflation-adjusted income. The 4% “rule” is oversimplified, and you will likely spend differently.

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