Retirement: Should You Adjust Your Budget Before 60?
Hello, Quentin here.
Yes: adjusting your budget before age 60 helps you spot the gaps between your future income and expenses before they become difficult to fix.
The rule of 70% of your final salary gives you a benchmark, not a reliable forecast. Your housing, health and plans matter just as much as the amount of your pension.
Good habits to adopt
- Track your expenses for several months, including annual bills and unexpected expenses.
- Estimate your future income by checking your career records and pension projections.
- Calculate housing and healthcare costs: mortgage, maintenance, bills, supplemental insurance and out-of-pocket costs.
- Plan for your goals: leisure, travel, helping loved ones and possible in-home services.
- Keep a safety margin for inflation and unexpected events, then review your calculations every year.
This kind of planning makes financial preparation more concrete: you can compare several scenarios instead of relying on a single percentage. To consider the impact of housing and unexpected expenses, also see these guides to housing in your retirement budget and healthcare costs to plan for.
Why the 70% rule isn’t enough to plan for retirement
Two people who earned the same salary may have very different needs once they retire. One may have finished paying off their home; the other may still have to pay rent or fund repairs.
Some work-related costs may decrease, such as daily commuting and meals out. Conversely, healthcare costs, leisure activities or helping family may take up a larger share. According to DREES, per-person spending on healthcare and medical goods for people aged 65 and over was about twice that of people aged 25–45, based on 2021 data published in 2023.
The 70% rule also does not account for deductions applied to pensions, the entitlements associated with each pension scheme or the length of retirement. Useful planning therefore relies on your figures, your circumstances and your assets—not on a general formula.
A practical example to test your budget
Imagine a couple expecting monthly pension income of 3,000 euros. They estimate their expenses at 900 euros for housing, 450 for healthcare and supplemental insurance, 600 for food, 200 for transport, 350 for leisure, 150 for helping loved ones and 350 for emergency savings.
The total comes to 3,000 euros: the budget looks balanced, but leaves no extra room. An increase in bills, a major repair or medical care that is not fully reimbursed could force the couple to rethink their plans. This table is a working example, not an amount recommended for everyone.
| Monthly expense | Estimated amount | What to check |
|---|---|---|
| Housing | €900 | Mortgage, bills, property tax, maintenance |
| Healthcare and supplemental insurance | €450 | Premiums and out-of-pocket costs |
| Food | €600 | Habits and price changes |
| Transport | €200 | Car, fuel, public transport |
| Leisure and travel | €350 | Plans and regular outings |
| Helping family | €150 | Gifts and occasional help |
| Emergency savings | €350 | Reserve for unexpected expenses |
The average retirement pension stood at around 1,500 euros net per month per retiree in 2021, according to DREES in its 2023 edition. This statistical benchmark does not predict your situation: amounts vary depending on career history, pension schemes and family circumstances.
Housing, inflation and healthcare: expenses to review before age 60
Housing often remains a significant expense even after a mortgage has been paid off. Condo fees, insurance, maintenance and property tax continue, while a home that has become difficult to maintain may require modifications or in-home services.
Moving can affect several budget items at once. Living closer to shops and healthcare can reduce travel, but rent or the purchase price may be higher. Compare the full costs and the impact on your daily life before making a decision.
Inflation also deserves a place in your calculations, because retirement can last twenty years or more. Energy, healthcare and service costs may change differently from your pension income: allowing a margin helps you avoid building a budget that is too tight.
Don’t cut leisure from your budget on paper
A common mistake is to count only so-called essential expenses. Yet outings, travel, club activities and helping your children are all part of real life. If you leave these items out, the budget may look viable while leaving too little room for the things you want to do.
Instead, build several scenarios: a typical budget, a scenario with higher healthcare costs and another where you move or reduce transport costs. Comparing them reveals which choices really improve your financial flexibility.
A 3-step method to adjust your budget before age 60
- Track your current expenses. For several months, sort them by category and add annual expenses such as insurance, taxes and repairs. This gives you a realistic snapshot of your standard of living.
- Project your retirement years. Identify what will decrease or disappear and what may increase. Estimate your pension income, other income and plans, then compare several assumptions about when you retire and where you live.
- Adjust and check regularly. If your projected expenses exceed your income, consider your options: change an expense, continue working, adapt a plan or review how much you save. Update your budget at least once a year and after any major change.
A simple spreadsheet is enough to get started: one column for current expenses, one for projected expenses after retirement and one for expected income. The key is to compare the figures with your actual situation, then make adjustments without waiting until the final year.
Helpful questions about budgeting before retirement
Should you aim for exactly 70% of your final salary?
No. This percentage does not take into account your housing, healthcare, plans or other income. At most, use it as a provisional benchmark, then build a budget based on your actual expenses and estimated pension income.
When should you start planning your retirement budget?
Several years before retirement, you can already check your entitlements, track your expenses and test different scenarios. Starting before age 60 gives you more time to adjust your savings and plans.
How often should you review your projections?
Once a year is a good routine, with an additional review if your housing, health, income or family situation changes. Compare projected expenses with the expenses you actually observe.
Should you pay off your mortgage before retirement?
Not necessarily. Paying off your mortgage can reduce expenses, but you should also weigh this option against the need to keep cash available and the other costs of housing. Make sure the monthly payments remain affordable on your future income.
Thanks for reading! Feel free to share your thoughts in the comments. — Quentin
