Written by Gina Young
Published Jun 04 | 8 minute read
How much money will you need in retirement?
It sounds like a straightforward question, but it's surprisingly hard to answer until you actually try living on a retirement budget.
Even those who have saved consistently and planned can feel uncertain as retirement nears.
"As retirement approaches, many realize that it's not just a financial transition but an emotional and psychological one too," says financial psychologist Alex Melkumian, PsyD, founder of the Financial Psychology Center and author of Calm Money. "Retirement pushes us to adjust not just our numbers but our identity and sense of security."
After years of earning, saving and growing your money, switching to spending it can take some getting used to.
That's where a retirement "trial run" comes in. It allows you to practice living on your expected retirement income before you retire. This way, you can see where your budget feels comfortable or tight and adjust while you still have time.
Before running the numbers, clarify what retirement looks like for you. This may include asking yourself:
It's also important to distinguish between "must-haves" and "nice-to-haves." Some expenses, such as housing and healthcare, are essential and must be factored in. Other expenses, such as taking trips or dining out, may be enjoyable but aren't necessary.
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Look at your anticipated income streams during retirement. Depending on how far out from retirement you are, these numbers could still grow, but this will at least give you a starting point.
Common retirement income sources include:
As of early 2026, the average Social Security benefit was around $2,000 per month for retired workers, which is why additional savings or income streams often play a critical role in covering expenses. (Here's how to open a Social Security account in five steps.)
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Once you have a clear picture of your income, the next step is building a retirement budget that reflects how you plan to live-not today, but years from now.
The key difference between a current budget and a retirement budget is time. You're essentially projecting what things may cost in the future. Inflation, rising healthcare expenses and lifestyle changes can all shift your spending over time, so it's important to build in flexibility.
Start by outlining your essential expenses and lifestyle spending, then consider how those costs may evolve. For example, housing costs may decrease if you downsize, while healthcare expenses may increase as you age.
To calculate your expenses, break them into four main categories:
Looking at your budget through this lens can help you better anticipate how your spending may shift over time and ensure your plans reflect both expected and unexpected costs.
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Now it's time to set up your retirement trial run.
Begin by deciding how long you want the experiment to last. Experts often recommend 30 to 90 days.
Calculate your expected monthly retirement income and treat that amount as your "retirement paycheck." The goal is to limit your spending to that figure during your trial period. You can approach this in a couple of ways:
Because you're still working, you'll likely earn more than your projected retirement income during this period. Instead of spending the difference, consider setting it aside in a savings account. This helps reinforce the discipline of living within your retirement budget while boosting your future cushion.
To keep the experiment genuine, avoid dipping into other accounts to cover shortfalls, unless it's part of a planned scenario you want to test. The goal is to see how your anticipated income holds up on its own.
Beyond the numbers, a trial run can also help you adjust to the emotional side of retirement.
"Moving from accumulation to decumulation can feel deeply unsettling," says Melkumian. "For years, the goal has been to build, save and grow. Then suddenly, retirement requires you to begin drawing from what you've spent a lifetime protecting. Even when the plan is sound, that shift can elicit anxiety, vulnerability and the feeling that you're doing something wrong."
A trial run will help you get used to breaking those so-called rules and, yes, spending your money in a responsible, strategic way.
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You may already have systems for tracking your finances, but it's especially helpful to use one during a retirement trial run.
A spreadsheet, budgeting app or tools provided by your online bank are all good options.
Set aside 10 to 15 minutes each week to check in: Look at what's going well, notice where you might be spending more or less than expected, and review any upcoming expenses. The key is consistency, not perfection.
By making the process straightforward and routine, you'll give yourself the best chance to stay on top of your spending and make adjustments as needed.
Once your basic trial run feels manageable, introducing "what if" scenarios can help you pressure-test your plan against real-life changes.
Try adjusting one variable at a time, such as higher healthcare expenses, lower investment returns, supporting a family member or a bigger travel budget.
Running both lean and higher-spending scenarios helps you see how your finances respond to challenges and opportunities, making the transition into retirement less intimidating and more controllable.
"Testing retirement income helps turn uncertainty into something more manageable," Melkumian says. "Instead of retirement living only in the abstract, it becomes something you can experience in real, practical ways. Running different scenarios helps the nervous system adjust gradually rather than all at once. That kind of repetition can reduce fear and build familiarity."
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At the end of the trial period, answer the following questions honestly:
Based on your answers, make adjustments where needed - whether that means tweaking your savings rate, rethinking your retirement timeline or shifting your spending priorities.
A trial run often leads to small refinements rather than major changes, and that's a good sign your plan is on the right track. If larger adjustments are needed, it's better to uncover them now than after you've retired.
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Even a well-planned trial run can miss a few key details. Watch for these common oversights that can throw off your results:
READ MORE: What is a Sinking Fund? How to Calculate Yours and Plan Ahead
Ready to put your plan in action? Let's review to make sure everything goes smoothly:
It's also a good idea to build in a small "joy budget" so the plan feels sustainable, not overly restrictive, and allows for occasional treats, like a regular budget.
Similarly, having an emergency fund in place before you begin can provide a safety net if unexpected expenses come up during your trial.
Along the way, you may also see the value of keeping some savings in stable, flexible places as you make the transition into retirement. Options like a high yield savings account, a money market account or a certificate of deposit can help you organize short-term funds while still earning interest.
Most importantly, a trial run gives you the opportunity to adjust before retirement begins. With a clearer picture of what to expect, you can move forward with greater confidence and a plan that feels realistic, not just theoretical.
READ MORE: 6 Expert Tips for Transitioning Into Retirement Successfully
Gina Young is an MBA and personal finance writer at Investopedia with more than 25 years of experience in the financial industry and 15 years writing about investing, budgeting and retirement planning. She is also the founder of the Money Savvy Living lifestyle blog, where she shares practical insights on everyday money management.