We're 63 With $1.5 Million in IRAs and $4,500 Monthly Social Security. How Much Can We Spend in Retirement?

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As you make your retirement budget, it's important to keep two issues in mind. First, understand your needs — what budget will you need to pay your bills, and what budget will you want to afford your lifestyle? And second, understand your capacity — what income can your portfolio comfortably and reliably generate for you?

Your retirement budget will lie at the intersection of these numbers, where your capacity meets your needs. In this case, let's assume you have a two-person household. As the question states, you have $4,500 per month in Social Security benefits and a $1.5 million IRA balance. Here are a few things to consider as you prepare for building this retirement budget.

Do you have questions about retirement planning? Speak with a financial advisor today .

Before anything else, figure out your personal and financial goals for retirement.

For example, between returns and security, think about what you'll prioritize when it comes to your finances. Do you want to retire right now at 63, or will you wait until age 67? Will you maintain your current lifestyle and location, or will you look for a change or cheaper/pricier area? Do you plan on continuing to work, and when will you start taking Social Security? Do you have any specific goals for estate planning?

This may seem like a wall of questions, but all of these factors will determine how you manage your money throughout the course of retirement. Being very intentional with your choices can allow you to maximize your money as you move through retirement. (And if you need help building a retirement plan, talk to a financial advisor .)

Once you have a sense of your goals, it's time to think about your spending. A good rule of thumb is that most households need about 80% of their pre-retirement budget to meet their in-retirement needs. Beyond that, some critical issues to consider include what's below.