How to estimate your spending in retirement

Start from what you spend now

Your budget once retired is the one number in a retirement plan that only you can give, and it changes the answer more than any other. The best place to start is what you spend now: you know it, and your bank app shows it.

Take everything you spend in a month after tax, including rent, groceries, insurance, subscriptions and holidays spread over the year. Then take out three things:

• Your mortgage. A mortgage ends in a year you already know, so plan it as its own cost until it's paid off, after tax relief (hypotheekrenteaftrek). If it stayed in your budget, it would go on after the mortgage ends. The other costs of your home stay in your budget: maintenance, the owners' association (VvE), insurance and local taxes.
• Your children's costs. Most of them stop once your children leave home. If they'll still live with you when you stop working, plan those years on their own.
• What you save. Money that goes into savings, investments or a pension isn't spending, and you won't be saving for retirement once you've retired.

What's left is your spending now, without the mortgage. Keep it in today's euros: adjusted for inflation, so each amount is what that money buys today. That way you don't have to guess prices 20 years from now.

What changes when you stop working

Most of what you spend doesn't change when you stop working. You still eat, heat your home and pay for insurance. Nibud, the national budget institute, found that fixed costs are about half or more of what retired people spend, about the same share as for people who work.

Some costs stop:

• Commuting: train passes, fuel and parking for the drive to work.
• Lunches at work, work clothes and a second car you only had for work.

Some costs go up or start:

• Travel and hobbies, especially in the first years, when you have the time and the health for them.
• Energy, because you're at home more of the day.
• A car, if you had a lease car, a mobility budget or a travel allowance through work.
• Health care. Your health insurance goes on, and premiums have risen faster than prices. The compulsory excess (eigen risico) is €385 a year per adult in 2026. Care and help at home cost more as you get older.

If you stop before your AOW age, the first years are often the ones with the most travel and plans. A budget that only covers the basics in those years is one you're unlikely to keep to.

What Nibud's figures show

Nibud compared the spending of households at different ages with the same income, using surveys by CBS, the national statistics office. These are its figures for a couple with €4,000 a month after tax, without rent or mortgage, in euros a month:

Two things stand out. First, spending in the first years retired was about the same as just before: 5% higher in 2015, and less than 1% higher in 2020. Leisure was lower in 2020 because of the lockdowns, so 2015 is the better guide for travel and going out. Second, spending fell from 75, by 6% to 10%. Transport and leisure went down, and care and help at home went up.

The figures compare different households at each age, not one household over time. Still, they point one way: at the same income, a budget close to what you spend now is a realistic start.

Housing is where retired people differ most. Nibud found owners who've paid off their mortgage have much lower fixed costs than people who rent. That's why it helps to plan the mortgage on its own: when it ends, your costs go down without your budget changing.

A worked example

A made-up couple, 36 and 34, have net salaries of €4,104 and €3,641 a month and a €420,000 mortgage until 2054. They spend €50,000 a year now without the mortgage, about €4,167 a month. Their child's costs are planned on their own, so they aren't in that amount.

Every €100 a month on their budget adds about €36,000 to what they need saved in 2042. That's why a careful estimate is worth an hour with your bank statements.

Why not 70% of your salary?

A common Dutch rule says you need about 70% of your last salary before tax once retired. It's lower than 100% for four reasons: you stop saving for your pension, the mortgage is often paid off, work costs stop, and you pay less tax from your AOW age.

If you've started from what you spend, the rule counts most of those twice. What you save is already left out of your spending, and the mortgage is planned on its own until it ends. The lower tax from your AOW age changes your income after tax, not what you spend. And the rule starts from gross salary, while a budget is money after tax. So start from what you spend, not from what you earn.

Spending that drops later in retirement

Research in the US found that spending falls by 1% to 2% a year, after inflation, through most of retirement, and rises again near the end with care costs. Nibud's Dutch figures point the same way, but the drop is smaller: 6% to 10% from 75.

A plan that keeps your budget the same, in today's euros, until you're 90 is the careful choice. If you spend less later, your money lasts longer than planned. Planning for a drop that doesn't come is the riskier mistake, since care costs are hard to predict.

Your budget counts most in the years before your AOW and pensions start, when your savings pay for all of it. The Pension Bridge guide explains how long those years are.