Can You Retire Comfortably with Today’s Cost of Living?

8 September 2025

Let’s face it — retirement isn’t what it used to be. The dream of riding off into the sunset with a fat pension, sipping margaritas on a beach, and never worrying about money again? For many, that feels more like a fantasy than a plan. Inflation keeps rising, healthcare costs are skyrocketing, and the prices of everyday goods aren’t coming down anytime soon. So, that big question is echoing in a lot of people’s heads: Can you retire comfortably with today’s cost of living?

Spoiler alert: It depends. But before you get discouraged, let’s break it down, look at the numbers, and figure out what you really need to know to make retirement work — on your terms.

What Does “Comfortable Retirement” Even Mean?

Before we dive into the dollars and cents, let’s get on the same page about what “comfortable” means. For some, it’s traveling abroad twice a year and golfing every weekend. For others, it’s simply staying in their home, enjoying a peaceful routine, and spoiling the grandkids once in a while.

A comfortable retirement is subjective, but the basic needs usually include:

- A roof over your head (paid off or affordable housing)
- Food, utilities, and transportation
- Healthcare and insurance
- Occasional travel or entertainment
- A cushion for emergencies

So, when we’re talking about retiring comfortably, we’re not just referring to scraping by. We’re talking about living with financial security and enough freedom to enjoy life.

Today’s Cost of Living Is No Joke

If you’ve gone to the grocery store lately or filled up your gas tank, you already know—things are pricier. Inflation might seem like just another financial term, but in real life, it makes a huge difference.

Here’s a snapshot of how the cost of living has changed in recent years:

- Groceries have jumped nearly 25% since 2020.
- Gas prices swing wildly, but they’ve stayed well above pre-2020 levels.
- Rents in many urban areas have increased more than 30%.
- Healthcare costs continue to outpace inflation.

Now, imagine stretching your retirement savings over 20 or 30 years with costs like those creeping up every year. That’s where the stress kicks in.

How Much Do You Really Need to Retire Today?

There’s no magical number that works for everyone. But let’s talk benchmarks.

The 4% Rule — Still Trustworthy?

You might’ve heard of the 4% rule: You withdraw 4% of your retirement savings each year, adjusted for inflation, and your money should last 30 years.

So, if you want $40,000 a year from your investments, you’d need about $1 million saved up.

Sounds simple, right? Unfortunately, today’s financial landscape throws a wrench in that math.

- Market volatility makes steady withdrawals risky.
- Life expectancy is increasing — you might need your money to last 35+ years.
- Healthcare costs are unpredictable and rising fast.

Because of this, many financial planners suggest lowering the withdrawal rate to 3.5% or even 3%. That means you might need to save even more than you thought.

Social Security: A Lifeline or a Lifeboat?

Let’s talk about the elephant in the room — Social Security. It’s still around, and for many retirees, it’s a crucial piece of the puzzle.

The average monthly Social Security benefit in 2024 is around $1,907, or about $22,884 a year. That’s not exactly living large, especially when you consider rent alone can eat up half of that (or more, depending on where you live).

Will Social Security cover all your expenses? Probably not. But it can be a solid foundation — if you plan wisely and have other income sources to supplement it.

Hidden Costs That Can Catch You Off Guard

Retirement isn’t just about what you need today — it’s about what might show up tomorrow. Some of the biggest threats to your retirement comfort come from unexpected corners:

1. Healthcare and Long-Term Care

Medicare helps, but it doesn’t cover everything. In fact, a 65-year-old couple retiring today might spend $315,000 or more out-of-pocket on healthcare during retirement, according to Fidelity.

And long-term care? That’s a whole different ballgame. Assisted living or a full-time caregiver can run $50,000 to $100,000+ annually — and most people don’t plan for that.

2. Taxes in Retirement

Many folks assume they’ll pay less in taxes once they retire. Well, that depends. Your Social Security benefits can be taxed. Withdrawals from traditional IRAs and 401(k)s? Taxable. Add in any rental income or part-time work, and your tax bill might be bigger than expected.

3. Inflation

Even modest inflation (say 3% annually) can cut your purchasing power in half in about 24 years. That Pepsi that costs $2 today could be $4 or $5 by the time you’re 85.

Is It Still Possible to Retire Comfortably?

Absolutely — but it takes planning, flexibility, and maybe a bit of sacrifice. Here are a few ways people are making it work, even with today’s high cost of living.

1. Downsizing: Less House, More Freedom

Big houses come with big price tags, bigger utility bills, and higher maintenance costs. Many retirees downsize to a smaller home or move to a more affordable area — sometimes even relocating abroad to places with lower costs and good healthcare systems.

2. Delaying Retirement (Yes, It Can Help)

Waiting a few extra years before you retire can make a huge difference.

- More time to save.
- More years contributing to Social Security.
- Fewer years to stretch your savings.

In fact, for each year you delay claiming Social Security past your full retirement age (up to 70), your monthly benefit increases by about 8%.

3. Part-Time or Gig Work

Retirement doesn’t have to mean you stop working entirely. A part-time job or a side hustle from home can keep you active, engaged, and — let’s be honest — bring in extra income.

You don’t have to go back to your old 9-to-5. Think tutoring, consulting, selling crafts online, or even driving for a rideshare.

4. Smart Investing and Expense Management

Even in retirement, keeping some money invested in the market can help fight inflation and grow your nest egg. The key? Balance your portfolio to reduce risk while still allowing for growth.

Also, trimming just a few hundred dollars a month in unnecessary expenses can add up big over time — that’s money that stays in your pocket instead of vanishing unnoticed.

5. Work with a Financial Advisor

Sure, you could DIY your retirement plan, but if you’re unsure or overwhelmed, a financial advisor can help demystify the process. They can run projections, tailor strategies, and spot gaps in your plan that might otherwise blindside you later.

What If You’re Already Behind on Retirement Savings?

You’re not alone. Roughly 25% of Americans have no retirement savings at all. But it’s never too late to start making progress. Here’s what you can do:

- Max out contributions to 401(k)s and IRAs — catch-up contributions kick in at age 50.
- Budget ruthlessly, prioritize saving.
- Eliminate high-interest debt ASAP (yes, that means credit cards).
- Consider annuities for guaranteed lifetime income.
- Look into reverse mortgages if you’re a homeowner and need cushion.

Let’s Get Real: Retirement Might Look Different — And That’s OK

Gone are the days of gold watches and guaranteed pensions. But retirement today doesn’t have to be scary or depressing.

It might mean redefining what retirement looks like:

- Working part-time doing something you love.
- Living in a lower-cost area.
- Traveling less frequently, but meaningfully.
- Focusing on experiences over stuff.

What matters most is having the freedom and financial security to enjoy your life on your terms, however you define it.

Final Thoughts: Can You Retire Comfortably with Today’s Cost of Living?

Yes — but only if you’re realistic, proactive, and adaptable.

Planning is everything. Start with a clear picture of your expenses, your savings, and your goals. Protect yourself against the big retirement pitfalls (inflation, taxes, healthcare), and be willing to adjust as needed.

Retirement isn’t a finish line — it’s a new chapter. And like any good story, it takes a little effort, some rewrites, and maybe a few plot twists. But with the right plan and mindset? You’ve totally got this.