What will retirement cost me? (Lesson 3)

What you spend now, what changes when work stops, and why it matters most.

Lesson 3 · Start here · about 4 minutes · 10 pictures

This is an educational walkthrough using a fictional family. It is not financial advice, and the right answers for you depend on facts a lesson cannot know.

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1.What will retirement cost me?

Title slide: What will retirement cost me? What you spend decides how long the money lasts, and it is the number you control most. With portraits of Ray and Angie.

Last time we found the gap between what comes in and what goes out. Today we look at what goes out. It is the number that matters most, and the one you have the most say over. As always: this is an educational walkthrough using a fictional family. It isn’t financial advice.

2.What is left is what you spend

A subtraction for Ray and Angie this year: pay $100,000, minus taxes $14,700, minus savings $5,200, leaves $80,100 spent. That is $6,678 a month, the $914 mortgage included.

Nobody likes writing a budget, so here is a shortcut. Take your pay. Take away taxes. Take away what you save. Whatever is left, you spent. For Ray and Angie that is about sixty-seven hundred dollars a month.

3.Some costs stop

A table of three costs that stop in retirement: commuting and work costs, saving for retirement ($433 a month), and the mortgage ($914 a month, paid off the year they stop).

Some of that goes away when you retire. No more driving to work. No more saving for retirement, because you are in it. And for Ray and Angie, the mortgage is paid off the same year they stop working.

4.One cost grows

One cost that grows: health insurance until Medicare at 65, $15,600 a year. A timeline of Angie’s age from 63 to 67 shows her buying her own coverage at 63 and 64, then Medicare from 65.

But one cost grows. Health insurance usually comes through a job. Stop working before 65, and you buy it yourself until Medicare starts. Angie is two years younger than Ray, so they pay for her coverage for two years. It is about fifteen thousand six hundred dollars a year.

5.What they plan to live on

$46,000 a year in large figures: what the Parkers plan to live on. Today, outside the mortgage, they spend $5,764 a month; in retirement, $3,833 a month.

Putting it together, Ray and Angie plan to live on forty-six thousand dollars a year once they retire. That covers food, the house, the car, fun, everything except health insurance and Medicare, which the plan counts separately.

6.Prices go up every year

A row of bars from 2026 to 2037 rising from $46,000 to $60,400: the same living costs priced in each year’s dollars at 2.5% a year, 31% more in eleven years.

There is a catch, and it is called inflation. Prices rise a little every year. What costs forty-six thousand dollars today will cost about sixty thousand by the time Ray retires. The app handles this for you. It shows amounts in today’s dollars so the numbers stay easy to judge.

7.Spend $500 more a month

App screenshot: the Dashboard with Annual Lifestyle raised from $46,000 to $52,000. The verdict now says the money is empty at 77, not 82: five years gone.

Watch what spending does. Ray and Angie’s money runs out when Ray is 82. If they spend five hundred dollars more each month, it runs out at 77. Five years gone.

8.How long the money lasts

Three horizontal bars showing how long the money lasts by Ray’s age. Spending $52,000 a year: empty at 77. The plan, $46,000 a year: empty at 82. $43,000 a year: empty at 85.

Now the other way. Spend two hundred fifty dollars less each month, and the money lasts until 85. Three more years, from one small change.

9.The one number you control

A table of what decides your retirement and who controls it. The stock market: not you. Prices: not you. What you spend: you.

You cannot control the stock market. You cannot control prices. You can control what you spend. In retirement every dollar you don’t spend is a dollar that stays in savings, every year, for thirty years.

10.Move the slider. Watch the answer.

Three steps: find the Annual Lifestyle card on the Dashboard, drag its slider up and down, and for your own plan start from a month of pay less taxes and savings. Below, the link to Ray and Angie’s plan.

Your turn. Open Ray and Angie’s plan and find the card that says Annual Lifestyle. Drag the slider up and down, and watch the answer change. For your own plan, try the shortcut. Take one month of pay. Subtract taxes and what you saved. That is what you spend. Write it down for the next lesson, where you build your own plan. This is education, not financial advice.

Try it

Ray and Angie’s plan opens with every number already filled in. Nothing you change there is saved, and it does not touch a plan of your own.

Open Ray and Angie’s plan