Retirement Budget: Are day-to-day expenses being underestimated?
Hello, this is Quentin. Yes, everyday expenses are often misjudged, because some decrease in retirement while healthcare, housing and leisure activities can cost more.
A percentage of your final salary is therefore not enough to create a reliable retirement budget. The most useful approach is to start with your actual monthly expenses, then adjust them according to where you live, your health and your plans.
Good habits to adopt
- List your current expenses using your bank statements, ideally covering several months.
- Identify what will decrease, such as commuting or certain work-related expenses.
- Plan for expenses that may increase, especially healthcare, home maintenance and in-home assistance.
- Include your plans in the budget: travel, outings or financial support for your family.
- Keep a safety margin for inflation and unexpected expenses, then compare the result with your retirement income.
To check that you haven’t missed anything, you can consult this list of expenses sometimes left out of retirement budgets and this guide to estimating future expenses.
Why retirement budgets vary so much from one person to another
The cost of living depends first and foremost on your housing and region. A homeowner without a mortgage has different monthly expenses from a renter in a large city, even if their incomes are similar.
Expenses also change with your lifestyle and state of health. Some work-related expenses disappear, but having more free time can increase the budget for leisure activities, travel and outings.
Everyday expenses that take on different importance
Housing often remains the biggest expense: energy, insurance, property tax, condominium fees and maintenance work continue to add up, even after the mortgage has been paid off. A home that has become too large or unsuitable can also lead to additional costs.
Healthcare deserves a separate estimate. Appointments, equipment, supplemental insurance and any in-home services can become more expensive with age; it’s better to review your coverage and out-of-pocket costs than to assume they’ll stay the same as they are today.
| Expense category | Indicative guide | What to check |
|---|---|---|
| Housing and energy | About 30 to 35% | Fees, maintenance, repairs and adaptations |
| Food | About 15 to 20% | Habits, prices and meals out |
| Healthcare and supplemental insurance | About 10 to 15% | Premiums and out-of-pocket costs |
| Transportation | About 8 to 12% | Car, travel and public transport |
| Leisure and travel | About 8 to 12% | Planned activities and how often you go out |
These percentages are general guidelines, not a model budget to copy. A high expense in one category may be offset by a lower cost elsewhere: your household’s actual circumstances should guide your estimate.
Three spending levels for a realistic estimate
A single figure can’t suit every situation. As a rough guide, a monthly budget of 1,500 to 1,800 euros may cover essentials with a modest lifestyle, while a budget of 2,000 to 2,500 euros leaves more room for travel, outings and helping family members financially.
Above 3,000 euros a month, the budget may include more expensive plans, such as a second home or long-distance travel. These ranges vary depending on household composition, housing and desired level of spending; they don’t guarantee the same standard of living everywhere.
A practical example to illustrate the gap
Claire and Marc expect to spend 2,000 euros a month, but estimate their pensions at 1,500 euros. Their shortfall is 500 euros a month, or 6,000 euros a year.
Over twenty years, that would amount to 120,000 euros, without taking returns, inflation or changes in expenses into account. This simplified calculation gives you a rough idea: it helps you start planning your finances, but it shouldn’t be the only basis for setting a final savings goal.
A three-step method for estimating your expenses
Budgeting becomes easier when you group and compare the figures. Here’s a practical process to follow before you retire, then update regularly.
- Establish your starting point. Record your actual expenses by category: housing, food, healthcare, transportation, leisure and family support. Bank statements can help you identify annual or irregular payments that are often overlooked.
- Project the changes. Subtract expenses that will disappear and add those related to your plans, healthcare or housing. Also allow for inflation and unexpected expenses—for example, you could start with a margin of around 10% and adjust it later.
- Compare expenses and income. Add up your estimated pensions and other resources, then compare them with your projected budget. The M@rel simulator on the official info-retraite.fr website can help estimate your entitlements; the resulting gap can then guide your savings choices and possible adjustments.
Planning for expenses doesn’t mean you have to predict every bill down to the last cent. A spreadsheet reviewed once a year is often enough to spot a rise in the cost of living or a lasting change in your habits.
Mistakes that distort expense estimates
The rule of thumb that retirement income should equal a fixed fraction of your final salary can provide an initial guide, but it doesn’t reflect your actual needs. A mortgage that’s paid off can ease your budget, while more expensive supplemental health insurance or home repairs can increase it.
Another common oversight is counting only monthly bills. Annual expenses—insurance, maintenance, property tax or replacing an appliance—should be spread over twelve months to avoid a false sense of security.
Finally, family support and leisure activities aren’t minor details if you want to continue paying for them. Including them from the start can help protect your purchasing power and build a budget that reflects the life you actually want to lead.
Frequently asked questions about expenses in retirement
How can I tell if my retirement income will be enough?
List your current expenses, adjust the categories that will change, then compare the total with your estimated pensions and other income. The difference indicates whether you may need to save more or adjust your budget.
Which expenses are most often underestimated?
Healthcare, home maintenance, annual expenses, leisure activities and financial support for family members are often forgotten or underestimated.
Should I allow a margin for unexpected expenses?
Yes. A reserve built into your budget can help absorb exceptional expenses and price increases. You can try an indicative margin, then adjust it to your circumstances and emergency savings.
How often should I review my retirement budget?
An annual review is a good routine. Revisit your calculations after a change in housing, health, family circumstances or income, too.
Thanks for reading! Feel free to share your thoughts in the comments. — Quentin
