This post is sponsored by Lexington Law


Even though I’m still in my 20s, learning about the F.I.R.E Movement and thinking in-depth of how I would budget to live on $10k/year has me thinking even more about what retirement will look like for me in the future.

Living on $10k/year in retirement seems incredibly challenging to me. Not only would you need all of your financial ducks in a row, but you would need to be prepared in other ways as well (like knowing there’s a limit to where you could travel and what you could afford). 

After doing that financial exercise, I’m thinking more and more about what retirement looks like for me in the future. I don’t plan to retire early but would like more financial freedom in the years to come. Also going forward, I don’t think our generation can safely rely on social security. Who knows what will happen, but I’m not sure I’m comfortable making it a large part of my future budget if I don’t even know if we will have it or not. 

All that said, here’s a look into how I’m calculating what I will need in my retired years. Your vision might look different — and I’d love to hear about it in the comments. 

Financially Independent (Not Retiring Early)

As we learned in my post on the F.I.R.E Movement, financial independence means living off of the returns of your investment accounts. You’re not dependent on a salary or income to cover your annual expenses. The idea is that you’ll withdraw 4 percent of your portfolio every year and live off of that amount. For F.I.R.E to work, strategists say to aim for an annual return of at least 5 percent. 

So for example, say you predict that you can live comfortably on $40,000 a year. Multiply that by 25 and you’ll need $1,000,000 in savings to retire. That’s the general rule of thumb for how to calculate what you’ll need in retirement.  

However, there are a lot of other things to consider as well. For example, how many years do you plan to be retired? What is your end of life care plan?

While the goal is to be financial independent during retirement, your savings plan needs to also include worse-case-scenario possibilities. Next, we’ll go a little deeper into what you need to calculate for retirement. 

Retirement Calculations

1. What your income will be.

Your “income” in retirement is what you plan to withdrawal from your retirement savings. This might include your 401(k), your IRA, or a few other types of accounts in some cases. 

One thing to think about is if you are you including social security or not. Many retirement calculators, like the one offered from Personal Capital, do include social security as an option in your calculations. Not including social security means you would need to be more aggressive in your savings earlier on. 

Additionally, you might have other high interest savings accounts where you’re saving for future purchases, like a retirement home. You may or may not want to include these kinds of things in your income projections.

You’ll also want to consider your current household income (both before and after taxes). It’s suggested that your budget will be around 80-100% of your current budget in retirement. This might be different though depending on where you plan to live and who you might be supporting at the time (for example if you have three kids now, you might not be budgeting for their expenses in your retirement!).

2. Spending goals.

Your spending goals is where it can get tricky because you’re essentially predicting the kind of lifestyle you’ll want to have in retirement. 

If you plan to travel a lot in retirement, your monthly budget might be significantly higher than someone who doesn’t plan to do so. It can also depend a lot on where you live, whether you own your home or not, your tax rate (including property taxes!), etc. 

It might also vary a lot depending on how much you plan to eat out, whether you’ll still be making a car payment, and what you’ll need for insurance. 

You can probably start sketching this out now based on your current spending.

Let’s look at my spending, for example.

A large part of my budget now goes to food. A lot of this is based on where we currently live because food is pretty expensive here. It’s also easy to get carried away with dining out.

So looking at my current spending, I’d need to decide what is a realistic for food in retirement. While I can’t do much to predict what my food spending in retirement will be, I’d wager to guess it would be at least 80 percent of what it is now. So if I’m spending $1,000/month on food, my spending in retirement might be $800/month — so that’s what I’ll predict. I feel like that would be reasonable for two people in a higher cost of living area. 

3. Savings rate (and accounts).

One thing a lot of these projections will take into account is how much you are saving each year. The sooner you can put more money into savings (and investments) the better off you’ll be in the long run because of compound interest

On my own retirement projections, I am putting $20,000/year into retirement savings. Based on that calculation, the retirement planner is estimating that I will have $7,000/month (even though my “needs” are only around $6,000/month). This is also estimating that I will retire at age 69… something that might change over time. It’s also including social security, so it’s likely in my best interest to redo these calculations without that assumption.

As for where you are saving your money, you should focus on tax-advantaged retirement accounts like a 401(k) or IRA based on your employment. And if your employer offers 401(k) matching… don’t leave that “free” money on the table! You can learn more about what other retirement accounts are available to you here

4. Project account growth.

Based on the information you put into the retirement calculator, it will give you projections on your account growth.

These projections will also take into account your effective tax rate, inflation rate, and life expectancy. You might retire in your 60s but live until your 90s so you’ll need to make sure you will have income during that time to support yourself.

This will vary person to person but most people traditionally expect they will retire at some point in their 60s. 

5. Your health.

No one wants to think about our health failing but we are really doing ourselves a disservice not to consider what might happen if we have major health issues.

For example, my mother started having major health issues in her 50s that limited her ability to work but my great grandmother lived until her late 90s with only minor health issues. My great grandmother is one of my major retirement inspirations because she owned her home, had ample money saved to be able to hire a caregiver to live with her as she needed help as she got older, and she owned real estate for additional income. 

Both realities are something I need to plan for because we never know what might happen.

6. Your age.

One major thing you’ll want to consider is the age at which you plan to retire. For some people who want to F.I.R.E, this might in in their early 30s or 40s. For others on a more traditional path, this might be in their 60s. At 67, you would get 100% of your allocated social security benefits, so people might wait until this age to officially retire. 

The earlier you retire, the less time you have to save more money and take advantage of compound interest but there are also other advantages (like more time to not be working) and disadvantages (like health insurance) that you’ll want to consider. 

What Retirement Looks Like In My 20s


How I’m Preparing Myself For Retirement In Other Ways

1. My emergency fund.

My emergency fund has been fully funded for many years now. My husband and I also adjust it as our expenses change (like when we had a baby earlier this year) that increases our monthly expenses. 

As part of my retirement plan, I would still want an emergency fund. Mostly because if something happened to my income streams, I would want to know that I had a few months to get it sorted out. I currently have six months worth of expenses in my personal emergency fund and eight months worth of expenses in my business emergency fund. These are insurance policies of sorts that help give me peace of mind.

I’d also want to know that if I had some unexpected expenses, like a car repair or an unexpected medical bill, that I could cover them. 

2. My credit score.

Your credit score can impact retirement in so many ways. Our friends at Lexington Law say that without a financial plan for retirement “folks will have to consider loans, credit cards, and other financial vehicles to help them cope with the loss of a regular paycheck.” 

You never know what might happen, not having a regular income like in retirement can put a strain on your finances if you do find yourself in need of a line of credit. And being that you don’t have proof of income from employment, you might find it even harder to access that credit. 

That’s just one reason why I’m so passionate about monitoring my credit with Lex OnTrack and having an excellent credit score. I’ve had my identity stolen in the past so actively monitoring my credit is extremely important to me. It’s also about building healthy financial habits now, like checking my credit report annually, to give me financial confidence as I get older.

Related: Lex OnTrack Review: Why You Should Monitor Your Credit

If you have concerns about your credit score or unfair negative items on your credit report right now, I suggest reaching out to the credit repair professionals at Lexington Law. Improving your credit score isn’t something you want to put off for to long. You can reach out for your free consultation here

3. Where I’ll live.

When I think about retirement, I see myself owning my home. I don’t want to be paying a mortgage at that time, though I do understand that it might make more sense to be paying a mortgage. In other words, having that cash in investments might be a better place for it to be rather than spending a large sum on a home. But looking forward now, I do plan to own the home I’ll retire in.

I’m not sure how much that will cost, but after we buy our first home, I plan to start saving for another home down payment.


Even though I’m turning 30 next year and realistically I know that retirement is likely a ways off, it’s been on my mind recently. Retirement is something we often push off as not important while we’re younger, but I do think there are ample reasons to start considering what we want retirement to look like for us.

The financial landscape is very different for millennials and Gen Z than it was for generations before. There’s not much we might be able to count on (like social security) so it’s really in our own best interest to get a handle on our financial planning now.

Have you thought about what retirement looks like to you? I would love to hear about it in the comments!