Frequently Asked Questions (FAQ) About Retirement Costs

Here are quick answers to some of the most common questions we hear from retirees and near-retirees about planning for their expenses.

How much should I budget for healthcare in retirement?

This is one of the hardest numbers to pin down because it’s so personal. It depends on your health, your longevity, and the type of insurance coverage you choose. Some financial services firms estimate that a 65-year-old couple may need several hundred thousand dollars for healthcare expenses throughout retirement. The best approach is to use the official plan comparison tools on Medicare.gov to estimate your potential out-of-pocket costs for premiums and services under different plans in your area.

Is it ever a good idea to carry a mortgage into retirement?

The traditional wisdom was always to pay off your mortgage before you retire. Today, the answer is more nuanced. If you have a very low, fixed-rate mortgage, some financial advisors argue that it can make sense to keep it and invest your cash elsewhere for a potentially higher return. However, for many people, the psychological peace of mind that comes from owning their home free and clear, and the reduction in fixed monthly expenses, is priceless. There is no single right answer; it depends on your debt level, interest rate, and personal comfort with risk.

Will my Social Security be enough to live on?

For the vast majority of people, the answer is no. The Social Security Administration itself states that benefits are designed to replace only about 40% of the average worker’s pre-retirement income. It is meant to be one part of a three-legged stool, alongside personal savings (like a 401(k) or IRA) and, if you have one, a pension. You cannot rely on Social Security alone to fund a comfortable retirement.