Retirement Budget Calculator: Test Your Monthly Spending

48% of workers have never estimated how much they'll need each month in retirement. That figure comes from EBRI's 2025 Retirement Confidence Survey. It means about half the people planning to stop working are guessing at the number that decides whether their money lasts. A retirement budget calculator fixes that, but only if you use it in the right order. First, build a realistic monthly spending number. Then test that number against your savings across many possible futures, not one average. This guide covers both steps.

How to budget for retirement with a calculator: the short version

If you only read this section, do this:

1. Find what you spend today. Use real numbers, not a guess.
2. Adjust each category for retirement. Decide what stops, what stays, and what goes up.
3. Give health care its own line. It doesn't behave like your other costs.
4. Plan for spending that changes with age. Most retirees don't spend the same amount every year.
5. Budget after tax. Withdrawals from many accounts are taxed.
6. Test the monthly number against your savings. The answer should be a probability of success, not a single projection.

The details follow.

Step 1: Start with what you actually spend

Your current spending is the best raw material you have. Pull a few months of bank and card statements and add them up. A few months smooths out the odd big month. Annual bills like insurance, property tax, and subscriptions need to be divided down to a monthly figure.

There's a shortcut. A common rule of thumb says you'll need roughly 70–80% of your pre-retirement income, as Next Avenue's guide to budgeting for retirement explains. It works as a quick sanity check, but it's a weak foundation for a plan. Next Avenue's more useful advice is to go through your current costs and ask which ones will continue and which will go away.

Step 2: Adjust each category for retirement

This is where a budget gets specific to you. For a reference point, here's what U.S. households headed by someone 65 or older spent in 2024, according to the Bureau of Labor Statistics Consumer Expenditure Survey (via FRED):

Housing is the biggest line by a wide margin. Total spending also rose from $60,087 in 2023 to $61,432 in 2024, so these benchmarks don't stand still.

Use the table as a comparison point. Your own budget is what matters. Some costs usually fall in retirement, like commuting, work clothes, and payroll deductions for saving. Others often rise, like travel, hobbies, and helping family. Write both kinds down.

Step 3: Give health care its own line

Fidelity's 2026 Retiree Health Care Cost Estimate puts lifetime health care costs at $185,500 for one 65-year-old and $371,000 for a couple. That's up 7.5% from the year before, according to coverage from NRMLA and Bloomberg Law (July 2026). The estimate assumes Original Medicare plus Part D, and it leaves out long-term care entirely.

Two points matter for your budget:

• It's rising faster than a typical line item. Fidelity's estimate rose 4% and then 5% in the previous two years before this year's 7.5%. If you fold health care into general inflation, you'll probably underestimate it.
• Many people assume Medicare covers it. The same coverage reports that 54% of pre-retirees wrongly believe Medicare pays for all their health care costs. It doesn't. Premiums, deductibles, and prescriptions come out of your budget.

Long-term care is the open question. No standard estimate covers it, so treat it as a known risk. Some people set aside a separate reserve for it. Others plan to use home equity. Either way, decide on purpose.

Step 4: Budget in phases, not one flat number

Most calculators assume you'll spend the same inflation-adjusted amount every year until the end. The data suggests otherwise. In 2024, households aged 65–74 spent $65,354 a year, while households 75 and older spent $55,834. That's a gap of about $9,500 a year.

One caution: these figures compare different households at the same moment. They don't follow the same people as they age. Still, the pattern is a useful way to think about phases:

• Early, active years. Travel, projects, and often the highest discretionary spending.
• Middle, slower years. Less travel and a more settled routine.
• Late years. Discretionary spending may fall, while health care and care costs take a bigger share.

You don't need three separate calculators for this. Know which phase your monthly number reflects. When you test your plan, try the higher early-years figure first. If the plan holds up at that level, you have room to spare.

Step 5: Budget after tax

This is the gap most retirement calculators leave open. Kiplinger's retirement calculator says outright that it doesn't account for taxes on retirement income. That means the amount you can actually spend is lower than the figure it shows.

Money withdrawn from traditional pre-tax accounts is generally taxed as income. If your budget says $5,000 a month for living costs, you need to withdraw more than $5,000 to cover the taxes as well.

There's also a health care angle. Medicare charges income-related surcharges, often called IRMAA (Income-Related Monthly Adjustment Amount), on top of standard premiums once your income passes certain thresholds. A large withdrawal in a single year can push your premiums up. That's why we model this in detail: the engine behind Monte Climb's retirement calculator charges Medicare premiums and income-based surcharges year by year instead of using a flat guess.

Inflation matters too. FinanceBuzz notes that expenses can double every 20–30 years. A retirement that starts at 65 and runs to 95 covers that whole span.

Step 6: Test the number in a retirement budget calculator

Now you have one honest monthly figure. The next question is whether your savings can support it.

Most calculators answer with a single straight line. They assume your investments earn the same average return every year and show a balance at the end. Real markets don't work that way. Returns vary from year to year. A bad stretch in the first few years of retirement, while you're also withdrawing money, can do lasting damage that later good years can't fully repair. This is called sequence-of-returns risk, and an average-return projection can't show it.

A Monte Carlo simulation handles this better. In plain terms, it runs your plan through many different possible market histories. Some start well, some start badly, and most are somewhere in between. Then it counts how many of those futures still have money left at the end. The result is a success rate, such as "870 of 1,000 futures stay funded."

That's also how researchers set safe-spending guidelines. Morningstar's The State of Retirement Income 2025 (December 2025) puts the safe starting withdrawal rate at 3.9% for a 30-year retirement. "Safe" here means money was still left in 90% of simulated outcomes, not that it matched an average return. To show the math: 3.9% of $500,000 is $19,500 in the first year, or about $1,625 a month from savings. That's an illustration, not a recommendation for you.

How long you test for matters as much as what you test. According to the Social Security Administration, about one in three 65-year-olds may live to at least 90 (Retirement Information for Medicare Beneficiaries, 2026). A plan that stops at 85 is quietly betting against a third of retirees. That's why plans built on Monte Climb run to age 95 by default, and you can extend them further.

What a success rate tells you, and what it doesn't

A success rate is a probability, not a promise. Here's how to read it:

• A high rate means your spending held up across most of the futures tested, including many bad ones. It doesn't mean nothing can go wrong.
• A lower rate isn't a verdict. It shows you which numbers to change: monthly spending, retirement age, or savings.
• Comparing results is where the value is. Run your number. Then run it again $300 a month higher, and again two years later. The difference between the results tells you more than any single answer.

Build a buffer for when your budget is wrong

It probably will be wrong, at least somewhat. In EBRI's 2026 Retirement Confidence Survey, 41% of retirees said their costs ran higher than expected, as reported by Boldin.

Plan for that now:

• Split essentials from extras. Know which part of your monthly number you could cut in a bad year.
• Test a higher number on purpose. If your plan only works when you spend exactly your budget, there's no room for error.
• Set guardrails in advance. Decide now what you'd cut, and by how much, if markets fall early. A rule you set while you're calm beats a decision made in a panic.

Run your own numbers

You now have a method: build the budget one category at a time, give health care its own line, account for taxes, and test the result as a probability.

The testing part takes three numbers: your age, what you've saved for retirement, and what you spend each month. Enter them at Monte Climb and we'll run them through 1,000 simulated futures and show how many stay funded. It runs in your browser, and nothing is saved until you say so. Then ask William, our AI planner, the follow-up questions: Am I on track? Can I retire at 62? What's a sustainable monthly spend?

Planning software, not advice. It gives you the odds so you can make the decision yourself.

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Frequently asked questions

How do I budget for retirement using a calculator?

Start by working out what you'll actually spend each month in retirement. Take your current spending, adjust each category for retirement, give health care its own line, and include taxes on withdrawals. Then enter that monthly figure, your age, and your savings into a calculator that tests the plan across many simulated market futures and gives you a probability of success.

How much does the average retiree spend per month?

According to the BLS Consumer Expenditure Survey (via FRED), U.S. households headed by someone 65 or older spent $61,432 in 2024, or about $5,120 a month. Households aged 65–74 spent $65,354 a year, and those 75 and older spent $55,834.

Is the 70–80% of income rule good enough for retirement budgeting?

It works as a quick sanity check, but it's a weak basis for a plan. A category-by-category budget that asks which costs will continue, which will stop, and which will rise, including health care and taxes, gives you a much more reliable monthly number.

How much should I budget for health care in retirement?

Fidelity's 2026 Retiree Health Care Cost Estimate puts lifetime costs at $185,500 for one 65-year-old and $371,000 for a couple, assuming Original Medicare plus Part D. It excludes long-term care, so plan for that separately.

What does a Monte Carlo success rate mean?

It's the share of simulated market futures in which your money lasts for the whole plan. For example, 900 of 1,000 futures staying funded is a 90% success rate. It's a probability, not a guarantee, and it's most useful when you compare results across different spending levels or retirement ages.