A Comfortable Retirement Depends on More Than Savings: These 5 Monthly Bills Matter Most

A comfortable retirement is not determined solely by the size of your nest egg. Your spending habits and lifestyle have a major influence on what “comfortable” really means.

For some people, $1 million in savings may be enough. Others may feel they need far more. The real test is whether you can consistently cover your monthly expenses with Social Security, portfolio withdrawals and other income. Keeping these recurring bills in mind can make that easier.

The bills you can’t skip: housing and health care

The first step in estimating what you need for a comfortable retirement is identifying the biggest expenses you cannot avoid. Even after a mortgage is paid off, homeownership still comes with costs such as property taxes, homeowners insurance, utilities and any homeowners association fees. Repairs and upkeep also need to be budgeted for.

Listing every housing expense can help you figure out how much money you will need. It may also lead you to consider changes such as downsizing, moving to a lower-cost area or selling your home and renting instead. Reducing housing costs can make retirement easier to manage.

No matter where you live, health care is another major expense. Medicare helps cover some costs, but premiums, prescriptions, dental care, vision care and other out-of-pocket spending still need to be paid. A Fidelity report estimates that a 65-year-old who retired last year could spend $172,500 on health care and medical costs over the course of retirement.

Everyday costs: food and transportation

The next two major bills cover everyday living expenses. Food-related spending includes groceries, restaurant meals and delivery. How much you spend depends on habits such as cooking at home or eating out, as well as where you live.

Transportation is another essential category. It can include car payments, insurance, gas, maintenance, rideshares, public transit and other travel costs. If both spouses are retired, you may be able to get by with one car instead of two.

Debt, taxes and insurance obligations

Debt, taxes and insurance can take a significant share of a retirement budget. Including them in your planning can help you avoid unwelcome surprises and build a more secure retirement.

Credit card balances, loans, mortgages and other debts compete with everyday living costs. It is best to eliminate them as quickly as possible, even if that means taking a part-time job or reducing spending sharply. Social Security can provide support, but it is also important to remember that it may be taxable. Pension income and withdrawals from traditional retirement accounts are taxable as well.

Long-term care is another expense that is often overlooked, especially early in retirement, but it can become a major cost later on. Long-term care insurance may help limit expenses if you need that kind of care, though the monthly premiums will still affect your budget.