Retirement: the standard of living you think you’ll maintain could plummet
Hey, Quentin here. The drop in living standards in retirement can be limited by preparing a realistic budget, checking your future pension and building additional income. The amount you receive depends on your career, housing, health and where you live: a pension alone doesn’t tell the whole story. The good news is that a few simple checks can help you take action before you retire.
Things to do right away
- Estimate the amount of your future pension with your pension schemes.
- List your current expenses, then identify which ones will change after you retire.
- Check your retirement savings entitlements and the withdrawal conditions for your investments.
- Plan ahead for housing, healthcare and transport costs.
- Allow for inflation and unexpected expenses, without counting on a guaranteed increase in income.
DREES finds that median household living standards fall by around 9% when people retire, while some people see their situation improve or remain similar. These figures show that a decline is not inevitable, but that financial planning matters: consult the DREES findings on retirees’ living standards and also consider how housing affects your retirement budget.
Why your standard of living may fall after retirement
A retirement pension often replaces only part of your salary. The amount varies depending on your career, periods without contributions and the pension schemes involved; an individual estimate is therefore more useful than a national average. As a benchmark, figures provided for 2025 put the average pension at around €1,626 gross per month, but this figure does not predict your situation.
A drop in income does not necessarily mean an equivalent drop in purchasing power. A paid-off mortgage or reduced transport costs can lower expenses, while rent, healthcare or helping a loved one can push them up. The gap between your income and your actual expenses is what reveals the risk.
DREES also indicates that people’s circumstances vary: around 35% of the people studied see their standard of living increase when they retire, and nearly half remain in the same category. As a simple idea puts it: “An average provides insight, but it can never replace a personal budget.”
Housing and location make a difference
Two retirees with the same pension can have very different lives. A home that is paid off in a low-cost area often leaves more room in the budget than high rent in a major city. Heating, transport and access to healthcare also matter.
If you own your home outright, still estimate upcoming repairs and maintenance costs. If you rent, check whether the rent will remain affordable on your expected income and consider your options before your budget becomes stretched.
For example: Claire and Marc had planned for leisure activities, but not for replacing their boiler. Setting aside money for home maintenance would have spared them from dipping into their emergency savings.
| Item to check | Why it matters | Useful action |
|---|---|---|
| Estimated net pension | It forms the basis of regular income. | Compare the estimate with your career records. |
| Housing | Rent, mortgage payments and repairs have a significant impact on retirees’ budgets. | Plan for annual expenses, not just monthly payments. |
| Additional income | Rental income, investments or part-time work can narrow the gap. | Assess net income, costs and risks. |
| Inflation and health | Prices and healthcare needs can change. | Leave some room in your budget and revise your projections. |
Financial planning: three steps to limit the drop in income
- Step 1: estimate your income. Check your records, identify any missing periods and request an estimate of your retirement pension. Include only additional income that you can reasonably anticipate.
- Step 2: calculate your future expenses. Separate fixed expenses, variable expenses and one-off costs. Set aside amounts for housing, healthcare and any support you may provide to loved ones.
- Step 3: make adjustments before you retire. Depending on your situation, you could increase your retirement savings, reduce a recurring expense, plan a move or consider part-time work. Check the tax implications and conditions of each option.
If your housing costs are low, focus on building a reserve for healthcare costs and unexpected expenses. If your rent or mortgage takes up a large share of your income, address that first before increasing your leisure budget.
Retirement savings and additional income: be cautious
Life insurance, a retirement savings plan, investments or a rental property can supplement a pension, but none of them alone guarantees a specific standard of living. You need to factor in fees, taxes, the risk of loss and whether the money will be available when you need it.
The monthly threshold of €3,000 sometimes cited as a measure of a comfortable retirement is not universal. It depends on the number of people in the household, the region, housing and individual needs; it’s better to set your own threshold based on your expenses.
To plan successfully for retirement, review your assumptions once a year and after any major change. A useful budget is a living budget: it adapts to your reality, not to a figure presented as valid for everyone.
Practical questions about living standards in retirement
Can the average pension tell you what your future standard of living will be?
No. An average provides a general benchmark, but your situation depends on your career, household, housing, healthcare expenses and additional income. You need to prepare an individual estimate.
How much should you aim to have each month to live comfortably in retirement?
There is no threshold that applies to everyone. The amount you need varies depending on the region, housing, household composition and regular expenses. Start by calculating your projected budget.
How can you limit a drop in income when you retire?
Check your entitlements, calculate your future expenses, correct any errors in your career records and consider suitable options such as savings or part-time work. Always assess the costs and risks.
Is additional income essential?
Not necessarily. It can improve your budget, but its usefulness depends on the gap between your income and expenses. An adequate pension and well-managed costs can also help maintain a good standard of living.
Thank you for your interest; best wishes, Quentin
