Retirement Benefits

How Much Money Will You Spend When You Retire?

The “80% rule” provides a guideline of what you can expect to spend in retirement according to some financial experts.

What’s the 80% Rule?

Following the “80% rule,” you’ll spend about 80% of the annual income you’ll be making before you retire during your retirement years. That means if your income just before you retire is $70,000, you can plan on spending about $56,000 annually in retirement.

The 80% rule assumes some major expenses will go down in retirement—commuting costs and retirement-plan contributions, to name two. But other expenses may go up, such as health care and travel expenses.

While some financial planners provide this general guideline of the income you’ll need to generate to live comfortably in retirement, there are many factors that affect what you’ll actually need. These include health care costs, housing expenses, inflation, investment performance, and more.

Do You Have Enough to Retire Comfortably?

Planning your financial future should involve not just your CalPERS pension, but other deferred compensation such as 401(k) or 457 plans, Social Security, health care, and more. And getting a grasp on these important factors shouldn’t start when you’re near the end of your career—it should start now.

Creating a plan to ensure you’re financially secure in retirement can be a challenging process, but we’re here to help. View our video series to help you prepare for retirement, then use our planning your financial future checklist as a guide to help you on your path to a financially secure retirement today.

Did You Know?

  • The average pension for all CalPERS service retirees, beneficiaries, and survivors is $36,852 per year, while service retirees receive $39,372 per year. New retirees who just retired in fiscal year 2020-21 receive $45,516 per year.
  • Overall, 59% of all CalPERS service retirees receive less than $3,000 a month. And only 4.9% of CalPERS service retirees receive pensions of $100,000 per year or more; they are usually executives who hold seats in either city or county offices, or are physicians, or senior managers for police and fire departments.
  • Unlike the private sector, about 33% of CalPERS retirees don’t coordinate with Social Security for benefits. Their CalPERS pension may be their sole source of retirement income. Visit Social Security & You CalPERS Pension to learn more.