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Financial discipline means making wise, consistent decisions about how to manage your money and achieve your goals. It may come naturally to some people, but many others need to learn and then practice it. Doing so can help you better understand and track your earnings, spending, and savings and make your money work harder for you. Financial discipline can help you on the path to buying a home, saving for your child’s education, or retiring early. And it can pay off by minimizing your money stress and enhancing your confidence.

This guide shares 10 essential ways to achieve financial discipline and enjoy its rewards.

What Does Financial Discipline Mean?

Financial discipline is the act of making smart decisions about your money so that you can achieve your financial goals and a sense of well-being. This can involve setting specific monetary (spending and saving) goals and tracking your progress.

Some aspects of financial discipline include:

•   Budgeting

•   Managing debt responsibly

•   Saving and investing

•   Setting and achieving financial goals

10 Steps For Achieving Financial Discipline

There are many paths to financial discipline, but these 10 steps can help you take control of your money and your financial destiny.

1. Getting Clear About Financial Goals

A vital step toward getting disciplined about money is setting financial goals. Writing down specific short-term, mid-term, and long-term financial goals can help illuminate a plan for how to proceed.

Here are some common examples of financial goals. They range from short-term money goals to longer-term ones:

Short-term Financial Goals

These are typically goals that you hope to achieve within a year or less.

•   Paying off credit cards and charge cards

•   Saving money for summer vacation

•   Setting and sticking to a spending limit for the month

•   Establishing an emergency fund

•   Saving a certain amount each month

Mid-term Financial Goals

Mid-term goals tend to have a longer horizon. Perhaps you work to achieve them in one to five years.

•   Paying off student loan debt

•   Setting aside funds for a wedding

•   Putting away money to buy a big-ticket item like a car

•   Saving up for an important home renovation

Long-term Financial Goals

These are aspirations that will likely take longer than five years to accomplish.

•   Saving for your child’s future college tuition

•   Putting away money for a down payment on a house

•   Investing in stocks and bonds for future returns

•   Setting aside money for retirement

2. Creating a Convenient Budget

Building a monthly budget isn’t necessarily at the top of everyone’s bucket list, but analyzing and tracking your expenses, spending habits, and savings can make it easier to get a handle on overall finances. Whether you use a cool journal, an online spreadsheet, or an app, there are many ways to manage a budget.

It can be worthwhile to try different types of budgets until you find one that is a good fit. Many people like the 50/30/20 budget rule, which says to dedicate 50% of your take-home pay to necessities, 30% to wants, and 20% to savings and/or additional debt payments above required minimums. Creating a budget can be a key aspect of becoming financially disciplined.

Recommended: 50/30/20 Budget Calculator

3. Paying Down Existing Debt

Debt comes in many forms — from student loan debt to car loans, medical bills to mortgages, and of course credit card debt. By getting rid of debt, you can save on interest and might positively impact your credit score by lowering your credit utilization ratio.

Paying down debt can be a critical facet of financial discipline, making it easier to save money, invest, and plan for a brighter financial future. Adding the debt paydown amount to your budget ensures it’s covered each month.

4. Opening a High-Yield Savings Account

There’s no specific answer to how much money you should have in savings. However, it is important to get started and contribute regularly. Even if it’s as little as $20 a month, setting something aside for savings ensures that funds will start to add up. By opening up a savings account and setting up a recurring deposit, you’ll be putting a pivotal piece of financial discipline on autopilot.

Of the different types of savings accounts, the specific kind you choose can make a big difference. According to the FDIC, the national average interest rate on savings accounts was 0.42% APY as of December 16, 2024.

By choosing a high-yield savings account (typically found at online banks), however, interest rates can reach 3.00% APY. This can help you build your financial position.

5. Establishing an Emergency Fund

Approximately 42% of Americans have no emergency savings, according to recent surveys. That means these individuals would likely have to take on credit card debt, secure a personal loan, or ask family or friends for financial help if they, say, lost their job or had unexpected bills to pay.

Establishing an emergency fund is an important step in gaining financial discipline. Most money experts advise socking away enough over time to cover three to six months’ worth of living expenses.

6. Cutting Back on Spending

Despite the best of intentions, overspending happens. Whether it’s a pileup of holiday gift purchases or too much shopping on social media, spending more than what you earn is bound to occur from time to time. Making sure it’s not a regular occurrence is a sign of good financial discipline.

Cutting down on spending can be guided by a good budget. Habits like shopping with a list to avoid impulse purchases, hunting for bargains, and using promo codes can help you make sure that you don’t overdo it with your credit and debit cards.

7. Seeking Sound Investment Strategies

Familiarizing yourself with a wide variety of investment accounts and strategies can help educate you and enhance your financial discipline. By weighing the risks and benefits of certain account types, penalties, fees, and the ability to access funds, you can select the right investment strategy. This in turn may help you achieve some of your longer-term money goals.

8. Automating Savings and Payments

A solid tool for achieving financial discipline can be to tap tech and automate your savings and payments. If you set up recurring transfers from your checking account to your savings right around payday, you can seamlessly build your savings instead of spending that cash.

By automating payments (say, to your utility companies or car loan lender), you help ensure that your bills get paid on time. This helps you avoid late fees and maintain your credit score.

9. Tracking Expenses Regularly

Tracking your expenses is something typically done when setting up a budget, but to achieve financial discipline, it’s important to check in regularly with your money. For example, inflation can take a toll on your expenses. Insurance premiums, rent, heating costs, and other regular payments can creep up and threaten your financial stability.

It’s wise to take a closer look if not monthly, then every few months. There are tools that can help you with this, too. See what your financial institution offers. They may offer a good money tracker to make this task extra easy. If not, third-party products are available.

10. Be Flexible and Patient

Last but not least is the fact that cultivating financial discipline is a process. Sometimes it will be harder than others. Perhaps you have a period in which you’re out of work and your credit card balance creeps up. Or maybe you have a baby or buy a home and are having trouble contributing to your retirement account. These curves along the road to financial discipline are part of life. Roll with them and adjust your plans, seeking help from a qualified financial planner if you like.

Don’t feel that just because you’re not where you want to be means all is lost. Financial discipline is a long haul, so go easy on yourself and keep pushing ahead, one step at a time.

Focusing on Financial Planning

The term “financial planning” might feel more like a unicorn you only get to meet when you’re floating high on a cloud of financial independence, but it’s actually another sound step along the way. These days, financial planning isn’t designated for the already wealthy, it’s becoming accessible and essential for people at every stage of life. In fact, in the age of digital transformation, financial planning can even be automated. This can be another way to optimize the long-term view of your money and your goals.

The Takeaway

Financial discipline revolves around setting specific financial goals and adopting habits that help you achieve them. By practicing financial discipline, you can create a budget, build up savings and an emergency fund, hit your money goals, and make progress toward a more stable financial future.

Finding the right financial institution to suit your needs can be another important step. Doing so can help you manage your money more easily, minimize fees, and earn interest on the money you stash away.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How long does it take to develop financial discipline?

Financial discipline is at its best when it’s a lifelong habit that provides money guidance and guardrails. That said, the habits that create financial discipline can be adopted in minutes. Establishing recurring transfers from your checking account into an emergency fund, for instance, is a “set it and forget” move that can be quickly accomplished.

What are the most common financial mistakes people make?

Common financial mistakes include not budgeting, not automating finances, and not prioritizing saving. Other issues can be overspending, relying too heavily on credit cards, and not setting short- through long-term goals.

How does financial discipline impact long-term wealth building?

Financial discipline can help you build long-term wealth. It’s a path to funding your financial aspirations, such as automating deposits into a savings account that’s earmarked for the down payment on a house. Also, by adopting and following a budget, you can keep your spending and saving in line with your earnings throughout your life.

What are some tools that can help with budgeting and saving?

There are many tools available to help with budgeting and saving. A good place to start can be with your financial institution. They likely have tools for automating transfers from checking into savings, tracking your spending, and budgeting wisely. If what they offer isn’t what you’re looking for, there are an array of third-party apps, both free and paid, that can help you.

Is it ever too late to start practicing financial discipline?

It’s never too late to start practicing financial discipline. Whether you’re just starting your independent financial life or are much further along, there’s likely a way to make managing your money more effective and easier. That could mean building a better budget, paying down debt, earmarking more funds for retirement, or figuring out the best way to start saving for your child’s education.

Photo credit: iStock/shih-wei

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOBNK-Q225-110

While both business and personal checking accounts allow you to safely store money and utilize those funds to pay bills and expenses, a business checking account can be a good idea for most folks who work for themselves or for other enterprises. In fact, depending on the structure of your business, you may be legally obligated to open a business bank account vs. a personal checking account, which is geared for an individual’s daily financial needs.

What Is a Business Checking Account?

A business checking account is a checking account specifically designed for business owners. As such, they often include business-specific features, such as payroll or bookkeeping integrations, the ability to assign debit cards to employees, or simplified credit card payment processing.

In many other ways, however, a business checking account is similar to the personal checking account you likely already have. It’s a safe place to stash cash and use it for regular, day-to-day expenses by way of writing checks, using a debit card, or initiating transfers. For example, it can allow you to:

•  Pay suppliers

•  Deposit payments from customers

•  Pay employees

But it’s only to be used for business-related expenses.

How Does a Business Checking Account Work?

When thinking about a business checking account vs. a personal checking account, you’ll find many similarities. You open the account, fund it with some money, and, hopefully, go on to deposit more cash as profits from your business roll in.

You’ll likely have access to the account via a debit card and/or a checkbook, and will likely also be able to log into the account and manage it online. (Both brick-and-mortar and online banks may offer business bank accounts these days, and most feature some kind of virtual account management option.) Business banking products often bundle both a checking and savings account, so you can start creating a cushion for a rainy day.

However, as mentioned above, a business bank account may come with some additional, business-specific features. It may also come with higher fees and minimum account balance requirements than a personal checking account, not to mention requiring documentation to prove you do, in fact, have a business.

Recommended: Guide to Business Checks vs Personal Checks

What Is a Personal Checking Account?

A personal checking account is a checking account used for personal expenses. Just like a business checking account, it’s a place where you can stash your cash with relatively few worries and use it to pay bills and expenses using a debit card, checkbook, or transfer services. Many banks also make it easy to bundle a personal checking account with a personal savings account, which is a great place to stash your emergency fund.

Unlike business checking accounts, though, a personal account won’t include business features. On the bright side, though, it’s very possible to find free personal checking accounts, which can help you save cash on those pesky monthly maintenance fees.

What Are Personal Checking Accounts Used For?

Personal checking accounts are commonly used for:

•  Storing money earned through employment or other income streams

•  Paying bills using transfer services or paper checks

•  Making transfers to friends, family, and businesses

•  Making point-of-sale purchases using a debit card

As their name suggests, personal checking accounts are designed to help you manage personal expenses and attend to your everyday money needs. Typically, a personal checking account is the hub of someone’s daily financial life. (It’s often paired with a savings account, which can allow you to earn interest and grow your money.)

Recommended: Guide to Budgeting Living Expenses

What’s the Difference Between Business and Personal Checking?

Here’s a recap of the differences between business and personal checking accounts:

Are Business Checking Accounts FDIC-Insured?

Business checking accounts should be insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). The FDIC is a government agency that protects deposit accounts, such as checking accounts, and reimburses lost funds up to the $250,000 standard insurance amount in the event your bank fails. (Some banks participate in programs that extend the FDIC insurance to cover millions.) The NCUA is a similar agency, but specifically geared toward credit unions.

The FDIC and NCUA insure business and personal accounts alike, but it’s always important to double-check and make sure the bank or financial institution you’re hoping to open an account with explicitly states that deposits are insured.

When Does Someone Need a Business Checking Account?

If you’re a small business owner — or even a freelancer — a business checking account might be a good idea, even if it’s not technically required. Keeping your business and personal expenses separate can help make accounting easier, simplify your tax reporting process, and help make your business look more legitimate to the IRS.

In addition, if you’re incorporating (i.e., operating as LLC, S corp, or other type of business entity), separating your business expenses from your personal expenses can help protect your assets in the event you get sued. Even if it’s not legally required, many accountants and law professionals recommend their clients open a business bank account for this reason.

A business bank account can help you:

•  Separate your business and personal expenses, which can both protect your assets and make bookkeeping easier

•  Help make your tax reporting easier, as all of your deductible expenses will be in one place

•  Make it easier to see your business’s cash flow and make adjustments to your business model as needed, or value the business for other purposes

•  Make your business look more legitimate to both the IRS and potential customers, vendors, and other parties you interact with professionally

Establishing a relationship with a bank could also allow you to more easily take out a small business loan or business line of credit in the future.

Can I Use the Same Bank for Personal and Business Banking?

In most cases, you are prohibited from using personal bank accounts for business purposes. This is typically noted in the account agreement. If it’s not prohibited, it’s still risky to mix account uses this way.

Case in point, the IRS explicitly recommends keeping separate business and personal bank accounts for record-keeping purposes. It’s easy to let it go by the wayside if you’re just starting up as a small business owner or entrepreneur, but consider whatever expenses the account incurs as part of your business start-up costs. It’s worth it in the long run.

Choosing the Right Business Checking Account

When you are shopping for a small business checking account, there are a few features that should be considered to help ensure that you find the right match. These include:

•  Fees. Many business accounts have fees associated with them, and if you are able to get them waivered, the financial requirements (say, the amount you have held in the account) tend to be higher than for personal accounts.

•  Cash deposit limits. Your bank may set a limit in terms of the amount of money you can put in the account per billing cycle. If you hit that amount, you may accrue a cash-handling fee.

•  Transaction limits. Your business checking account may have a limit on the number of transactions they will handle for free per billing cycle. Go over that amount, and you may be charged.

•  Interest. There are business accounts that offer interest on your balance. Do the math though to see if this should be a deciding factor in your choice of a bank. If fees are higher at the bank offering interest, you might wind up losing money in the long run.

•  Bundled services. Your bank might offer some free features, like a business credit card or merchant services, along with your checking account.

Depending on the nature of your business and how you handle your banking, some of these factors may matter more than others. Find the bank that gives you the most features and perks you are seeking with the lowest fees possible.

Find a Business Checking Account That Fits Your Needs

To find a small business checking account that fits your needs, you’ll want to compare accounts from different institutions to find the one that best aligns with your business’s financial needs and goals.

Consider factors such as monthly fees, transaction limits, and interest rates. Look for accounts that offer robust online banking features, mobile apps, and customer support. Finally, evaluate any additional services that may be important to you, like free wire transfers, business debit cards, or access to small business loans and business lines of credit.

The Takeaway

If you own your own business or earn freelance income, keeping your business expenses separate from your personal expenses can help simplify your life in many ways. A business bank account will help keep these finances differentiated, streamlining accounting and tax preparation, and protect you if you were to ever face business liability.

While SoFi doesn’t currently offer business accounts, see what we offer for personal accounts.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What documents are required to open a business checking account?

In order to open a business checking account, you’ll need your regular, basic documents — like your government-issued picture ID — as well as business-specific documents such as your EIN and business license. Check with the bank you’re considering directly for full details on which documents are required.

Can I open a business checking account without an LLC?

It depends on the financial institution, but yes, business accounts are available that don’t require the business owner to be incorporated in any way.

Can I use a personal checking account for business?

Account holders are typically prohibited from using a personal checking account for business purposes. Check your account agreement for details. Even if this wasn’t explicitly prohibited, it can cause confusion and issues, especially in terms of paying your taxes. What’s more, there are special business banking features you might get if you opt for a business-specific account, simplifying your life.

Are business checking accounts subject to different fees?

Yes, business checking accounts often have different fees compared to personal accounts. These can include monthly maintenance fees, transaction fees, wire transfer fees, and charges for additional services like business debit cards. It’s important to review the fee structure to find an account that aligns with your business’s financial activities and budget.

Why separate business banking from personal?

Separating business banking from personal accounts helps maintain clear financial records, simplifies tax filing, and protects personal assets from business liabilities. It also enhances professional credibility and makes it easier to manage cash flow, track expenses, and secure business loans or credit.

Photo credit: iStock/mapodile

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOBNK-Q225-118

Determining a good monthly retirement income isn’t one-size-fits-all. However, many financial experts suggest couples should aim for around 80% of their pre-retirement income to maintain a comfortable lifestyle. If you earn $100,000 in your final working years, for example, you’ll need around $80,000 annually or $6,667 monthly in retirement.

You might also consider the average retirement income for a couple. According to the U.S. Census Bureau, the median household income for retired couples aged 65 and over in 2023 was $84,670 per year, or about $7,056 per month.

The exact monthly income you and your spouse or partner need, however, will depend on several factors, including your expenses, age, health, and desired lifestyle. Below, we explore these key considerations to help you estimate your ideal monthly retirement income and explore where that money might come from.

How Being a Couple Affects Your Income Needs

Being part of a couple can significantly impact retirement income needs, making it different from retirement planning as an individual.

While some expenses may double — such as food, travel, and health insurance — others can be shared, leading to cost savings. For example, housing, utilities, and transportation often remain similar whether supporting one person or two. That means a couple may not need twice the income of a single retiree to maintain a comfortable lifestyle.

That said, couples typically need to plan for a longer period of retirement, since one partner generally outlives the other. This requires careful long-term planning to ensure both partners are financially secure throughout retirement.


💡 Quick Tip: Want to lower your taxable income? Start saving for retirement with a traditional IRA. The money you save each year is tax deductible (and you don’t owe any taxes until you withdraw the funds, usually in retirement).

What to Consider When Calculating Your Monthly Income

There are many misconceptions about retirement spending. Some couples assume that their expenses will drop significantly after retiring, but that’s not always the case. Here are some key factors to consider when calculating your monthly income needs.

Spending May Not Be as Low as You Think

Many couples anticipate that their living costs will go down after retirement, since they’ll spend less on commuting, professional clothing, and lunches out. Expenses like payroll taxes for Social Security and retirement account contributions also go away after retirement. However, these savings can potentially be offset by increased spending in other areas, like health care, travel, leisure activities, gifts for grandkids, or home renovations. Retirees may also find themselves spending more on hobbies and dining out as they have more free time.

It’s important to calculate your current monthly expenses and then consider which ones may go down or up when you stop working to get an accurate sense of your monthly income needs.

Spending Doesn’t Stay Steady the Whole Time

It’s a common retirement mistake to assume spending will be fixed once you enter the retirement phase of your life. In reality, spending patterns typically take on a U-shaped curve over the course of retirement. Expenses tend to be highest in the first several years, due to increased spending on travel, hobbies, and activities couples may have put off while working. Spending then generally declines as retirees get older and less active, only to rise again due to higher health care costs and (possibly) long-term care expenses. You’ll want to be sure your retirement income plan accounts for all of these different phases of retirement.

Expenses May Change When One of You Dies

When one spouse passes away, the surviving partner often experiences a significant shift in their financial needs. Some expenses like housing may stay the same, while others — such as food, travel, or entertainment — may decrease. In addition, the surviving spouse might lose one source of Social Security or pension income, potentially straining finances. As a result, it’s critical to plan for income flexibility.

Essential vs Discretionary Expenses

When calculating your monthly retirement income needs, it’s important to differentiate between essential and discretionary expenses.

•   Essential expenses are the non-negotiable costs necessary to maintain your basic lifestyle and standard of living in retirement. Examples include housing, utilities, groceries, healthcare, and transportation.

•   Discretionary expenses are optional expenses that enhance your quality of life but are not strictly necessary. These can be adjusted or reduced if your income fluctuates or unexpected costs arise. Examples include: travel/vacations, entertainment, dining out, hobbies and recreation, charitable donations and gifts, and subscriptions and memberships.

By separating needs from wants, you can develop a realistic budget, adjust discretionary spending if your income fluctuates or unexpected costs arise, and increase your chances of a financially secure and enjoyable retirement.

Planning for Inflation and Health Care Costs

Inflation significantly impacts financial needs in retirement by eroding the purchasing power of your income and savings over time. As prices rise, the same amount of money buys fewer goods and services, potentially forcing you to withdraw more from your savings each year to cover expenses. It’s crucial to factor in a realistic inflation rate when calculating retirement needs.

Health care costs also tend to increase over time, both due to inflation and the fact that medical needs generally increase as you get older. Without proper planning, you may find that premiums, out-of-pocket expenses, and services not covered by Medicare can deplete your retirement savings.

Common Sources of Income in Retirement

Building multiple reliable income streams can help ensure a stable and sustainable retirement. Here are the most common income sources for retirees:

Social Security

For many American couples, Social Security is a key retirement income stream. In May 2025, the average Social Security monthly check for retired workers was $2,002.39, according to the Social Security Administration’s (SSA) Monthly Statistical Snapshot. For a couple, this could amount to approximately $4,005 per month. However, benefits vary based on your earnings history and the age at which you start claiming.

Retirement Savings

Retirement savings accounts, such as 401(k)s and IRAs, provide additional income for couples after they leave the workforce. Financial planners often recommend using the 4% rule as a guideline for drawing down your retirement savings. This guideline is based on a 30-year retirement and designed to help ensure you don’t outlive your savings.

To follow the 4% rule, you add up all of your combined retirement savings, then aim to withdraw 4% of that total during your first year of retirement. For example, if you have $1 million in savings, you would withdraw $40,000 per year or around $3,333 monthly. The following year, you would adjust that 4% to account for inflation. So if inflation was 2%, you would give yourself a 2% raise.

While the 4% rule can be a helpful guideline, you may need to adjust your spending rate based on your situation, age, and the performance of your investments.

In addition, as you save for retirement, a retirement calculator can give you a sense of how much you should be regularly putting toward retirement savings to meet your goals for those later years.

Annuities

An annuity is a financial product sold by insurance companies that can offer an income stream in retirement and/or increase retirement savings. With an income annuity, you make a lump sum investment then receive a payout for life or a set period of time. With a tax-deferred annuity, you accumulate tax-deferred savings, while also having the option to receive income in the future. This makes annuities attractive for couples looking for stability after retirement.

Other Savings

The other savings category includes money you have in savings accounts, certificates of deposit (CDs), and nonretirement brokerage accounts. These funds can serve as backup or supplemental income. While they don’t offer the tax advantages that come with retirement accounts, they provide liquidity and flexibility, which can be helpful for managing unexpected expenses.

Pensions

A pension is an employer-based plan that pays out a specified amount of income on a regular basis (typically monthly) to an employee after they retire. It’s generally funded by the employer during the employee’s working years, and those funds are usually invested so they can grow over time. If a worker stays with that employer for a certain period of time, they are eligible to receive payouts from their pension plan when they retire.

Pensions are not as commonly offered as they used to be, however, having largely been replaced by 401(k)s and other defined contributions plans. If neither you nor your spouse have ever worked for a company that offered a pension, you won’t be able to rely on this as a source of income after retirement.

Reverse Mortgages

A reverse mortgage enables eligible homeowners to tap their home equity to earn income in retirement. The most common type of reverse mortgage is called a Home Equity Conversion Mortgage (HECM). HECMs allow homeowners aged 62 and older to borrow against the equity in their home without making monthly payments. The loan is typically repaid when the borrower sells the home, moves out permanently, or dies.

While reverse mortgages can boost monthly retirement income, they have some significant downsides, including fees and interest, which are added to the loan balance each month. And either you or your heirs will eventually have to pay the loan back, usually by selling the home. It’s important to consider the pros and cons carefully before taking out a reverse mortgage.

How to Plan for Retirement as a Couple

Planning for retirement as a couple is an ongoing process that ideally begins decades before you actually retire. Some of the most important steps in the planning process are:

•   Figuring out your target retirement savings number

•   Investing in tax-advantaged retirement accounts

•   Paying down debt

•   Deciding when you’ll retire

•   Deciding when to take Social Security benefits

•   Developing an estate plan

•   Planning for long-term care

Working with a financial advisor can help you to create a plan that’s tailored to your needs and goals.

Recommended: Can a Married Couple Have Two Roth IRAs?

Strategies for Generating Passive Income in Retirement

Passive income helps reduce reliance on withdrawals from retirement accounts, allowing your savings to last longer. Here are two effective strategies for couples:

Rental Properties and Real Estate Investment

Investing in real estate, such as single family rentals or duplexes, can generate steady income in retirement. While property management may require effort, many retirees hire managers or invest in Real Estate Investment Trusts (REITs) to avoid day-to-day responsibilities, making this a type of passive investment.

In addition to cash flow, investing in real estate can add diversification to your portfolio and may come with tax benefits. As with any other investment, however, there are potential risks with passive real estate investing. For example, there’s a chance that property values can decline or an investment doesn’t earn the expected profits.

Dividend Stocks and Interest-Bearing Accounts

Dividends and interest can provide a modest — but steady and reliable — cash flow in retirement.

•   Dividend stocks are shares in companies that distribute a portion of their profits to shareholders, typically on a quarterly, semiannual, or annual basis. Many retirees invest in established “blue chip” companies known for consistent payments. These investments can offer both income and potential portfolio growth. However, they also carry market risk, as stock values fluctuate with economic conditions.

•   Interest-bearing accounts, such as high-yield savings accounts, CDs, and money market accounts, provide a low-risk way to generate income. These accounts pay interest on deposited funds and are typically backed by FDIC insurance, offering a high level of safety. However, returns are often lower than what you could earn by investing in the stock market over the long term.

Maximizing Social Security Benefits

Technically, anyone who is employed for at least 10 years is eligible to begin taking Social Security benefits at age 62. But doing so reduces the benefits you’ll receive. To get the highest possible payment, you and your spouse would need to delay benefits until age 70. At that point, you’d each be eligible to receive an amount that’s equal to 132% of your regular benefit. Whether this is feasible or not can depend on how much retirement income you’re able to draw from other sources.

If one of you has earned significantly less than the other, you may be able to maximize Social Security benefits by taking advantage of spousal benefits. This benefit allows the lower-earning spouse to receive up to 50% of the higher-earning spouse’s Social Security benefits once they reach full retirement age (67 for those born in 1960 or later). However, the higher earning spouse must already be receiving benefits.

The Takeaway

A good monthly retirement income for a couple in 2025 will depend on a variety of factors, but you might aim to earn around 80% of your current monthly income. This amount can likely cover essential and discretionary spending while accounting for inflation, taxes, and unexpected health care costs.

To make sure you’ll have sufficient income in retirement, it’s important for couples to take a holistic view of their finances — combining Social Security, retirement savings, pensions, other savings, and passive income sources — to build a sustainable plan.

With smart planning, clear communication, and diversified income strategies, you and your life partner can enjoy a secure and fulfilling retirement together.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

FAQ

What is the average retired couple income?

The median household income for retired couples aged 65 and over is $84,670 per year, or about $7,056 per month, according to 2023 data from the U.S. Census Bureau. This includes income sources like Social Security, pensions, savings, and investments. However, actual income can vary widely depending on lifestyle, geographic location, and retirement planning.

What is a good retirement income for a married couple?

A good retirement income for a married couple is typically around 80% of their pre-retirement income to maintain a comfortable lifestyle. For example, if a couple earned $100,000 annually before retiring, a target retirement income would be about $80,000 per year.

This rule of thumb assumes that some expenses (such as payroll taxes for Social Security, retirement account contributions, and work-related expenses) go away after retirement. However, some couples may find that their expenses don’t significantly decline if they travel extensively or take up expensive hobbies or leisure activities.

How much does the average retired person live on per month?

According to the U.S. Bureau of Labor Statistics 2023 Consumer Expenditure Survey, the typical household age 65 and older has monthly expenditures of $60,087. That breaks down to monthly spending of about $5,007 per month. However, many factors can impact a particular household’s spending and the amount of money they need to feel secure.

How can couples manage retirement income tax efficiently?

Couples can manage retirement income tax efficiently by diversifying their sources of income in retirement and planning withdrawals strategically.

When you’re saving for retirement, you might use a mix of tax-deferred retirement accounts, like traditional Individual Retirement Accounts (IRAs) and 401(k)s, and accounts that allow tax-free withdrawals in retirement, like Roth IRAs. This allows for greater control over taxable income.

Once you retire, consider withdrawing funds strategically. For example, if your taxable income is low in a given year, you might withdraw from tax-deferred accounts. If your income is high, you may be better off pulling from tax-free sources like a Roth IRA.

What are some common mistakes couples make when planning for retirement?

Common mistakes couples make include underestimating healthcare costs, failing to plan for longevity, and relying too much on one income source (like Social Security). Many couples also overlook inflation’s impact on fixed incomes and/or retire too early without sufficient savings.

Proper planning, ongoing financial reviews, and professional guidance can help avoid these pitfalls and ensure a secure retirement.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.