You and your spouse can judge whether retirement is affordable by comparing your expected household spending with income you can count on, then testing whether savings can cover the remaining gap after taxes and health costs. The answer depends on your actual expenses, Social Security estimates, retirement dates, accounts and ability to adapt—not on a universal savings target.
Build a shared household budget before choosing a nest-egg target
Start in current dollars, unless your planning worksheet explicitly accounts for inflation. Estimate the costs you expect after work ends, separating expenses you would need to meet from those you could reduce. Fidelity’s 2026 guidance offers a broad orientation of 55%–80% of pre-retirement income for retirement spending, depending on lifestyle and health costs. That is a provider heuristic, not a measured requirement for every household; your own budget is more useful.
| Budget area | What to estimate | How to treat it in the plan |
|---|---|---|
| Housing and household basics | Mortgage or rent, property taxes, utilities, maintenance, food and transportation | Mark costs you must meet as essential; identify any that could change, such as a mortgage payment ending. |
| Health and insurance | Premiums, out-of-pocket care, dental and vision costs, and any coverage needed before Medicare | Estimate by retirement age and coverage source rather than assuming costs stay constant. |
| Taxes and debt | Expected taxes on income and withdrawals, plus debt payments | Use after-tax cash flow in the affordability calculation; note when debts are expected to end. |
| Flexible and irregular spending | Travel, hobbies, gifts, family support, home or vehicle repairs, and other occasional costs | Set an annual estimate and decide which items you could cut or defer if income or returns disappoint. |
Fidelity’s 2026 discussion estimates that an active lifestyle may call for a budget 15 percentage points higher than a less active one, and attributes 15% of living expenses to health care in its general spending discussion. These are broad estimates, not substitutes for your own activity plans, premiums and cost estimates.
Map each spouse’s income and the date it begins
Make an income schedule rather than adding together figures that begin at different times. Record each spouse’s Social Security estimate at several possible claiming ages, along with pensions, annuities, part-time earnings, rental income and other dependable sources. For each source, note the start date, whether it is taxable, and any conditions that affect how long it continues.
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Use each spouse’s own Social Security earnings record for personalized estimates. The Social Security Administration’s account-based tools let workers compare claiming ages; its guidance says retirement benefits may begin from age 62 through 70, with the monthly benefit increasing for later claims up to age 70. An estimate is tied to that person’s earnings history, so one spouse’s figure cannot stand in for the other’s.
Separate the last workday from the Social Security claim date
Stopping work and starting benefits do not have to happen at the same age. The Social Security Administration says, “For many people, this is not the same age they’ll stop working.” Its benefit calculation uses a worker’s highest 35 years of earnings; if there are fewer than 35 years with covered earnings, years without covered earnings count as zero. A work gap or a later year of earnings can therefore affect an individual estimate.
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Include both spouses and the surviving spouse
Use the Social Security Administration’s account tools to compare benefits based on each spouse’s earnings record, including possible spousal benefits. Then model household income in two situations: while both spouses are alive and after one dies. Consider what happens to the survivor’s income alongside ongoing housing, insurance and other expenses; do not assume that two-person income continues unchanged for the survivor.
Calculate the savings-funded gap after taxes
For each year in your schedule, subtract dependable income from expected household spending. Estimate the savings withdrawals needed to fill the remaining gap, accounting for taxes on benefits and withdrawals where applicable. Comparing gross income with after-tax expenses can make a plan look more affordable than it is.
Use a withdrawal percentage only as a scenario assumption. Fidelity’s 2026 general guideline is an initial withdrawal of 4%–5% of savings in the first retirement year, followed by inflation adjustments to that amount in later years. Fidelity notes that results depend on factors including longevity, inflation, market returns, retirement age and investment mix. The range is not a guaranteed income level; a longer retirement or spending that cannot adjust may make a simple rule less suitable.
Price health coverage across the Medicare transition
Include the coverage bridge if either spouse retires before Medicare eligibility, and estimate premiums and out-of-pocket costs for each stage of retirement. Vanguard recommends accounting for pre-65 coverage and individualized costs. Employer retiree benefits, location and health can change the household estimate, and long-term care can add costs.
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Fidelity’s 2026 estimate is $185,500 in after-tax savings for the retirement health expenses of a 65-year-old individual. It is an estimate for one person, not a couple’s guaranteed total, and it does not establish the costs for your coverage or every possible long-term-care need. Do not simply double it and treat the result as a personalized forecast.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Compare retirement and claiming scenarios side by side
Test more than one schedule: both spouses retiring together, one spouse working longer, and different Social Security claiming ages. Use the same spending assumptions across scenarios unless there is a clear reason they would change. Compare the following measures:
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| What to compare | Record for each scenario |
|---|---|
| Savings withdrawals | Which years require withdrawals, and the estimated after-tax amount needed to meet spending. |
| Social Security and survivor income | Each spouse’s estimated monthly benefit at the selected claim age, and the household income picture after the first spouse dies. |
| Health coverage | Coverage source and estimated cost before and after Medicare eligibility for each spouse. |
| Taxes and account access | How income and withdrawals may be taxed, and whether funds are available when needed. |
| Spending flexibility | Which discretionary expenses could be reduced if returns are lower or costs higher than assumed. |
The Social Security Administration’s estimate tools can support the benefit-age comparison. Your household must supply its own spending, tax and coverage figures.
Stress-test the plan and check access to retirement savings
Review the schedule under less favorable conditions, not only the assumptions you hope will hold. Test a longer life, lower investment returns, changed inflation, higher health or care costs, and different retirement or claim dates. For each case, identify whether essential spending remains covered and what flexible spending could change if the savings gap grows.
Check account-specific access and tax rules before planning early withdrawals. IRS guidance says some distributions before age 65—or before a plan’s normal retirement age if that is earlier—may incur an additional 10% income tax, subject to exceptions. The applicable treatment depends on the account and the facts, so verify the rule for the specific distribution rather than assuming every account has the same penalty.
A plan looks more workable when reliable income covers essential costs and the remaining savings-funded gap can be managed even in less favorable scenarios. If it depends on optimistic returns, omits health coverage, or leaves the surviving spouse with a shortfall and no adjustment, revisit the assumptions before setting a retirement date. This is a planning signal, not a personalized financial determination.
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