--- title: Busey Bank | Estimating Your Retirement Income Needs description: Busey Bank's Money Matters blog identifies important basics you need to consider when considering your retirement income needs. image: https://moneymatters.busey.com/hubfs/MoneyMatters/2501_BAN_MM_February_Q1W3_350x350.jpeg --- - [Personal](https://www.busey.com/personal) - [Business](https://www.busey.com/business) - [Wealth Management](https://www.busey.com/wealth-management) - [Mortgage](https://www.busey.com/mortgage) - [Ag Services](https://www.busey.com/ag-services) - Community - [Busey Drives Generosity](https://www.busey.com/busey-drives-generosity) - [Community Banking](https://www.busey.com/personal/community-banking) - [Community Calendar](https://www.busey.com/about-us/community-calendar) - [Community Shred Day Events](https://www.busey.com/about-us/shred-days) - [Financial Education Center](https://www.busey.com/personal/financial-pathways) - [Busey Bank Bridge Scholorship](https://www.busey.com/busey/busey-bank-bridge-scholarship) - 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One of your first steps should be to estimate how much income you'll need to fund your retirement. That's not as easy as it sounds, because planning for your financial future is not an exact science. Your specific needs depend on your goals and many other factors. ![An older man and woman run on a beach with a young girl and boy.](https://moneymatters.busey.com/hs-fs/hubfs/MoneyMatters/2501_BAN_MM_February_Q1W3_600x200-1.jpeg?width=1250&height=417&name=2501_BAN_MM_February_Q1W3_600x200-1.jpeg) **Use your current income as a starting point** It's common to discuss desired annual retirement income as a percentage of your current income. Depending on whom you're talking to, that percentage could be anywhere from 60% to 90%, or even more. The appeal of this approach lies in its simplicity, and the fact that there's a fairly common-sense analysis underlying it. Your current income sustains your present lifestyle, so taking that income and reducing it by a specific percentage to reflect the fact that there will be certain expenses you'll no longer have, theoretically, allows you to sustain your current lifestyle. The problem with this approach is that it doesn't account for many changes you will face. If you intend to travel extensively in retirement, for example, you might easily need 100% (or more) of your current income to get by. It's fine to use a percentage of your current income as a benchmark, but it's worth going through all of your current expenses in detail, and really thinking about how those expenses will change over time as you transition into retirement. **Identify your sources of retirement income** Identifying your sources of retirement income is essential. Your employer may offer a traditional pension that will pay you monthly benefits. In addition, you may count on Social Security to provide a portion of your retirement income. To get an estimate of your Social Security benefits, visit the Social Security Administration website at [ssa.gov](https://www.ssa.gov/). Additional sources of retirement income may include a 401(k) or other qualified retirement plan, IRAs, annuities and other investments. The amount of income you receive from those sources will depend on the amount you invest, the rate of investment return and other factors. Finally, if you plan to work during retirement, your job earnings will be another source of income. **Project your retirement expenses** Once you retire, you likely won’t be adding to your income sources. That's why estimating your expenses is a big piece of the retirement planning puzzle. But you may have a hard time identifying all of your expenses and projecting how much you'll be spending in each area, especially if retirement is still far away. Think about the things that won’t go away: utilities, housing costs, insurance, debt payments, health care, recreation, transportation, food and clothing. While not comprehensive, this will get you started. Don't forget that the cost of living will go up over time, and that your retirement expenses may change from year to year. They may change categories, but they likely won’t decrease. For example, you may pay off your home mortgage or your children's education early in retirement. Other expenses—such as health care and insurance—may increase as you age. To protect against these variables, build a cushion into your estimates. It's always best to be conservative and having an emergency fund can help with temporary hiccups. **Decide when you'll retire** To determine your total retirement needs, you can't just estimate how much annual income you will have and what your expenses will be. You also have to estimate how long you'll be retired. The length of your retirement will depend partly on when you plan to retire. This important decision typically revolves around your personal goals and financial situation. For example, you may see yourself retiring at 50 to get the most out of your retirement. Maybe a booming stock market or a generous early retirement package will make that possible. Although it's great to have the flexibility to choose when you'll retire, it's important to remember that retiring at 50 will end up costing you a lot more than retiring at 65. **Estimate your life expectancy** The age at which you retire isn't the only factor that determines how long you'll be retired. The other important factor is your lifespan. We all hope to live to an old age, but a longer life means that you'll have even more years of retirement to fund. To guard against outliving your assets, you'll need to estimate your life expectancy. You can use government statistics, life insurance tables or a life expectancy calculator to get a reasonable estimate of how long you'll live. Experts base these estimates on your age, gender, race, health, lifestyle, occupation and family history. But remember, these are just estimates. There's no way to predict how long you'll actually live, but with life expectancies on the rise, it's probably best to assume you'll live longer than you expect. **Make up any income shortfall** If you're lucky, your expected income sources will be more than enough to fund even a lengthy retirement. But what if it looks like you'll come up short? Don't panic—there may be steps that you can take to bridge the gap. A financial professional like those with Busey Wealth Management can help you figure out the best ways to manage these issues. However, a few things to consider are bumping up your retirement savings, evaluating your current investment strategy, adjusting your expenses now and for retirement, or reconsidering your retirement date. To find a Busey Wealth Management advisor near you, visit [busey.com/wealth-management](https://www.busey.com/wealth-management).   **This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.** **This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.** **This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.** **![2406_LOGO_NoNotMay_WM_Disclosure_Gray](https://moneymatters.busey.com/hs-fs/hubfs/Logos/Wealth%20Management%20Not%20May%20No%20Logos/2406_LOGO_NoNotMay_WM_Disclosure_Gray.png?width=511&height=59&name=2406_LOGO_NoNotMay_WM_Disclosure_Gray.png)**   Topics: [Retirement Planning](https://moneymatters.busey.com/tag/retirement-planning) # Join the online Busey community and leave a comment below! ### Busey Bank knows Your Money Matters Money Matters, a financial blog designed to provide insights, resources and tips from the financial experts at Busey, covers a variety of topics to help you realize your financial goals. 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