Ask most people how much they need to retire and they'll give you one of two answers. Either a number that sounds vaguely plausible but has no real basis — 'a million dollars, probably?' — or a shrug. They genuinely don't know.
This isn't surprising. 'How much is enough?' is one of the most personal questions in financial planning. It depends on where you live, how you want to spend your time, whether you own your home outright, what your health is likely to cost, and dozens of other variables that are specific to you and nobody else.
The problem is that most retirement planning glosses over this question. A calculator assumes 70% of your pre-retirement income. A financial adviser uses a standard benchmark. And you end up planning for a retirement that fits someone else's life, not yours.
This article is about thinking through the question honestly — including the parts of retirement spending that are consistently underestimated and the parts that people consistently overestimate.
The Two Predictable Mistakes
Mistake 1: Overestimating what you'll spend in the early years
The standard framing of retirement spending — a consistent annual amount from retirement until death — doesn't match how people actually spend money in retirement. Research consistently shows that spending tends to be highest in the early retirement years, when people are healthy, active, and making up for decades of deferred travel and experiences.
If you plan for $80,000 per year across a 30-year retirement, you may find that you spend $95,000 in the first five years and considerably less as your 70s and 80s bring a naturally quieter pace. This can make early retirement feel financially precarious — running hot against your plan — when in fact you're simply front-loading what was always going to be an uneven distribution.
Planning for a single flat number doesn't capture this. It's more honest — and more accurate — to think in phases.
Mistake 2: Underestimating healthcare and support costs
The other side of the same coin. While discretionary spending tends to decline in later retirement, healthcare costs tend to rise — sometimes significantly. Dental, optical, hearing, specialist appointments, medications, mobility aids, and eventually home support or residential care are all costs that most people in their 50s don't feel viscerally and therefore don't plan for seriously. A retirement plan that doesn't account for this phase is incomplete.
A More Honest Way to Think About Retirement Spend
Rather than a single annual figure, consider thinking about your retirement in three phases — each with its own spending profile.
The Active Phase (roughly your 60s to early 70s)
This is the phase most people picture when they think about retirement. Good health, freedom, travel, time with grandchildren, hobbies that require energy and investment. Spending in this phase is typically at its highest — and should be planned for accordingly.
What do you actually want this phase to look like? Be specific. How many overseas trips per year? What does a typical week contain? What recurring pleasures matter most to you? This is the phase where 'enough' means something positive and generous.
The Settled Phase (roughly mid-70s onwards)
Pace slows. Travel becomes less frequent or less ambitious. Entertainment costs tend to drop. The home — if owned outright — becomes more central. Spending in this phase is typically lower than the active phase, though still meaningful.
The settled phase is also when giving starts to feel more important for many people — to children, grandchildren, or causes. If generosity is part of your vision for this phase, plan for it explicitly.
The Care Phase (variable — could begin earlier than expected)
The phase that most retirement plans ignore. Home care, assisted living, residential aged care — these are significant costs that can arrive suddenly or gradually, and their financial impact depends enormously on the quality of care you want and the options available.
A conservative approach to retirement planning at least acknowledges this phase and builds some buffer for it, even if the exact cost is unknowable. 'I'll deal with it when I get there' is not a plan.
The 'Enough' Test
Having thought through the three phases, you can apply a simple test to any retirement spend figure you're considering:
- Does it cover your active phase generously — including the things that matter most to you?
- Does it remain adequate in the settled phase without requiring constant anxiety about running out?
- Does it leave some buffer for the care phase, even if you can't precisely quantify it?
- Is it a number you can actually live comfortably on — not one that requires constant sacrifice?
If yes to all four, you're in the right territory. If one of these is clearly 'no', you know what to adjust.
The Danger of Planning for Too Little
There's a version of retirement planning that's so focused on achieving the earliest possible exit from work that it optimises hard for a lower spend figure — one that's technically survivable but not genuinely fulfilling.
Retiring at 57 on $42,000 per year might be numerically achievable. But if it means forgoing the travel you'd planned, cutting back on experiences with family, or approaching every expense with anxiety — it may not be the retirement you wanted. Working two more years for a spend figure that allows genuine freedom might be a better trade.
'Enough' is not the minimum you can survive on. It's the amount at which you can live the retirement you actually want, without financial stress becoming the defining feature of a period of life you've worked decades toward.
The Danger of Planning for Too Much
The other error — less commonly discussed — is spending your working life accumulating far more than you'll ever need, at the cost of years you could have spent differently.
Some people reach retirement with assets substantially beyond what any realistic projection of their needs would require. They are financially comfortable — but they worked five or ten years longer than they needed to, deferred experiences and time and freedom that they could have had, because the number never felt quite enough.
There's no universal answer to where 'enough' sits. But it's worth asking the question directly rather than letting anxiety about 'what if I run out' drive an indefinite deferral of a life you've earned.
How ExitAge Helps You Pressure-Test Your Number
ExitAge is built around the principle that your retirement spend should be something you set deliberately — not something assumed on your behalf. You enter the figure that reflects the retirement you actually want to live, and ExitAge shows you when that becomes financially sustainable.
But the real power is in the experimentation. What if you planned for $70,000 instead of $80,000? How much does that move your ExitAge? What if you planned for $90,000 — how much longer do you need to work?
These aren't hypothetical questions. They're the actual trade-offs you're making with your life. ExitAge makes them visible — in years, not in abstract numbers — so you can decide consciously what 'enough' means for you.
Spend ten minutes adjusting your retirement spend figure in ExitAge and watching your ExitAge shift. What you learn about the shape of your situation is often more valuable than any single output the calculator produces.
The information provided in this article is general in nature and not designed as financial advice. Readers are recommended to seek their own individual financial advice before making decisions. ExitAge is designed to be educational for users to understand how different scenarios will impact their potential retirement.