Personal Budget Planner

About what you spend now, minus the costs of working and saving, plus healthcare and whatever you plan to do with the time. The rule of thumb of 70% to 80% of pre-retirement income is a starting point, but your own spending history is a better one. Take twelve months of bank and card statements, total them, subtract the 401(k) contributions, payroll taxes, commuting and work wardrobe that will stop, and add the travel, hobbies and healthcare that will start.

Then look ahead by decade. Many retirees spend most freely in their sixties and early seventies, when travel is easiest, and less on lifestyle later, while healthcare rises steadily. A budget that holds every line flat for thirty years will be wrong in both directions. Plan the first ten years in detail, and treat the later years as a shape rather than a number.

You set your own paycheck. While you work, income arrives and the budget divides it. In retirement, income comes from three places: Social Security, any pension or annuity, and withdrawals from your portfolio. The first two are fixed. The third is a decision you make every year, and the budget is what tells you how large it needs to be.

• Taxes come out of withdrawals. A dollar from a traditional IRA is ordinary income. Budget the after-tax amount that reaches your account, and plan the gross withdrawal separately.
• Premiums come out of Social Security. Most people have their Medicare Part B premium deducted from their Social Security benefit before it is paid (Medicare.gov), so the deposit is smaller than the benefit on your statement.
• Income can change your costs. Medicare Part B and Part D premiums rise for higher incomes, based on your tax return from two years earlier (SSA). A large one-time withdrawal can raise premiums two years later.
• There is no raise to fix a mistake. Overspending in the early years comes out of the portfolio that has to last for decades, which is why the budget matters more now, not less.

Plan for premiums, deductibles and the costs Medicare does not cover, for each of you. In 2026 the standard Part B premium is $202.90 a month with a $283 annual deductible, and the Part A hospital deductible is $1,736 per benefit period (CMS, 2026). Income-related surcharges begin above $109,000 for single filers and $218,000 for joint filers. On top of that come Part D drug coverage, a Medigap policy or Medicare Advantage plan, and dental, vision and hearing care, which Original Medicare largely does not cover.

Over a whole retirement the totals are large. Fidelity estimates that a 65-year-old may need $185,500 after tax to cover healthcare in retirement (Fidelity, 2026). The share of spending rises with age: households headed by someone 65 to 74 spent 11.9% of their budgets on healthcare, and those 75 and older 16.0% (BLS, 2018 data). If you retire before 65, add marketplace or retiree coverage until Medicare begins. The Healthcare Cost Estimator and our Medicare and IRMAA guide go further. Long-term care is a separate question; see the long-term care guide.

Separate the income that keeps pace with prices from the income that does not. Social Security is adjusted each year for inflation; the 2026 cost-of-living adjustment is 2.8% (SSA, 2025). Most private pensions and fixed annuities are not. At 3% inflation, a $2,000 monthly pension buys what about $1,280 buys today after 15 years, and what about $820 buys today after 30.

The practical response is to let the portfolio carry the inflation. Cover as much of your essential spending as you can with Social Security, which adjusts, and expect the share paid by portfolio withdrawals to grow over time as fixed income loses ground. Each January, update the budget for the new COLA and new Medicare premiums, and raise the planned withdrawal for last year's inflation. The Inflation Calculator shows what any fixed payment will be worth in the years ahead, and our pension lump sum vs. annuity guide covers the choice if you still have one to make.

Give it its own line, sized on purpose. Gifts to children and grandchildren are one of the fastest-growing costs in many retirements, because they happen one request at a time. A planned amount, whether a monthly 529 contribution for each grandchild or a set sum each December, lets you give generously without wondering whether you can afford it.

• Annual exclusion. In 2026 you can give up to $19,000 to each person without filing a gift tax return; a married couple can give $38,000 to each.
• Education. Contributions to a grandchild's 529 plan count toward the exclusion. The College Savings Calculator shows what a gift today could grow to.
• Charity from an IRA. From age 70½ you can give up to $111,000 a year directly from an IRA as a qualified charitable distribution. It is not taxable income, and after RMDs begin it counts toward them. See our QCD guide.

Our guide to gifting to children and grandchildren covers the tax rules and the trade-offs between giving now and leaving an inheritance.

As a separate, flexible line, largest in the early years. Travel is usually the biggest discretionary cost in retirement and the easiest one to adjust. Budget it annually rather than monthly, since trips are lumpy, and decide in advance what you would cut in a year when the portfolio falls 20%. A couple who plans $20,000 of travel and knows they would drop to $10,000 in a bad year has a built-in shock absorber that protects the rest of the plan.

Front-loading is reasonable. Most people travel more in their sixties than their eighties, and a plan that spends more on travel early and less later can still be sustainable. The Retirement Withdrawal Calculator lets you test a higher withdrawal in the first decade.

Spending minus guaranteed income equals what the portfolio must supply. In the template above, $9,980 of monthly spending less $7,000 of Social Security and pension leaves about $3,000 a month to cover from savings, before tax. Gross that up for tax on IRA withdrawals, multiply by twelve, and divide by the portfolio to get your withdrawal rate. If the rate is comfortably sustainable, the budget works. If it is not, the budget is where you find the room.

The order in which you draw from taxable, tax-deferred and Roth accounts matters as much as the amount. Our withdrawal order guide and how much you need to retire explain both.