As you prepare for retirement, you may wonder if your savings are on track to maintain your quality of life while being able to pursue hobbies or travel with your increased leisure time. According to research by Boston College, 50% of households are at risk of not having enough funds to continue their standard of living in retirement.
Your exact financial needs will depend on your goals during retirement. Do you want to age in place? Do you plan on traveling? Are you going to pursue a new hobby? These are just a few of the questions you’ll want to know the answer to as you create your strategy for financial stability during your retirement.
Keep reading below to see how your retirement income compares to the rest of the nation’s average retirement income and what you can do if you think it won’t be enough to meet your needs. Navigate directly to the FAQ you’d like to learn more about or continue reading for a full overview.
TABLE OF CONTENTS
What is the average retirement income? What’s the median retirement income?
What’s the monthly average retirement income?
What is a good monthly retirement income?
What amount should I have saved for retirement?
What can I do if my retirement income falls below average and I feel it won’t be enough?
Retirement planning and average retirement income
KEY TAKEAWAYS
Median retirement income for seniors is around $24,000; however, average income can be much higher.
On average, seniors earn between $2000 and $6000 per month.
Older retirees tend to earn less than younger retirees.
It’s recommended that you save enough to replace 70% of your pre-retirement monthly income.
This works out to around 10-12 times the amount you make in a year.
For those who want to supplement retirement savings, a reverse mortgage can help.
What is the average retirement income? What’s the median retirement income?
According to data from the US Census Bureau, the average retirement income is around $73,000. However, the median retirement income—which is often a more accurate reflection of the majority of cases—is just around $47,000. As retirees age and continue to use up their income streams, average income goes down. A full breakdown of retirement income by age can be found in the chart below.
If those averages seem a little high, remember those numbers are slightly misleading because households making the highest amounts of money will skew the data and pull up the average. The mean or average income is calculated by adding together each household’s income and then dividing by the total number of households.
The median income is calculated by putting together all incomes from low to high, with the very middle income in the list acting as the median. Many experts believe the median income is a more accurate representation of retirement income. However, those median numbers still don’t reflect the reality for a large swath of retired Americans.
The Pension Rights Center reports that half of all Americans age 65 or older have incomes less than $24,224 a year. That number is lower because it’s only individual incomes of those above the age of 65, not household totals. As you can see from the numbers above, the median household income falls as you move farther up in age.
As USAToday.com asks, could you live on around $32,000 as you hit your mid-70s? That’s the median income for households aged 75 and older. If that doesn’t seem like enough, there are ways to ensure you have additional streams of income to depend on that we will dive into in later sections.
Curious about other helpful income statistics? Read our guide to the average American net worth.
What’s the monthly average retirement income?
There is no exact monthly average retirement income for retirees because of a variety of unpredictable factors such as investment returns, inheritance funds, and savings differences. If we refer to the median numbers mentioned in the first section, here are some of the monthly numbers based on the median annual incomes.
Again, these are simply a more granular look at the median income averages per age range on a monthly basis. They may not reflect your particular situation.
What is a good monthly retirement income?
A good monthly retirement income is enough to keep your standard of living comparable to what it was before you left your career. A good rule of thumb is to save enough to replace around 80% of your pre-retirement monthly income.
For example, if you were earning about $5000 a month before retiring, you can aim for an average monthly retirement income of $4000 afterward. This is because in retirement, you’ll no longer be making contributions to Social Security and Medicare—and instead, you’ll be benefiting from those programs.
Ultimately, what is a good monthly retirement income will depend heavily on personal factors. These may include:
Cost of living where you retire
Lifestyle costs
Medical needs
Retirement travel plans
Plans for heir inheritance
And more
Knowing how to budget retirement money can seem tricky at first—but it doesn’t have to stay that way. Read our full guide on how to save money on a fixed income for more helpful retirement financetips.
Getting Started with Reverse Mortgages
If you’re looking to get started with a reverse mortgage, these articles can help guide you through all aspects of the process.
That depends, but the AARP recommends saving 10-12 times your current salary. Another rule of thumb mentioned above is to replace around 80% of your annual pre-retirement income. When you begin to plan your retirement income strategy, you’ll need to consider your personal finance goals, future travel plans, and other expenses.
When you retire, your spending might increase in some categories, like health care, for example. But other expenses like your car loan or student loan payments may be low or non-existent since you’ve had time to pay down your debts.
The amount of money you need for retirement differs from individual to individual. It’s best to plan out a number that allows you to retire comfortably with the help of a financial planner who can dispense expert advice on dependable revenue streams and how to safely draw down your savings and other retirement funds. Your income will likely need to last at least 20-30 years, depending on the age you leave the workforce and retire.
What can I do if my retirement income falls below average and I feel it won’t be enough?
Knowing how to afford retirement is consistently one of Americans’ top 5 retirement concerns. Ideally, you can consult a financial planner to decide what your options are if you feel that your retirement income won’t be enough to meet your individual goals.
As you map out your retirement income strategy, you should consider three major pillars: flexibility, growth, and guaranteed sources of income.
Many older Americans rely on Social Security benefits as a dependable source of income during retirement, but that’s only one part of the bigger picture when it comes to bridging the gap to maintain your standard of living. Some of the options for creating retirement income, such as an investment portfolio, should begin early on in your life. But even if you’ve had a late start to investing, you can still make up for lost time by investing more of your income into your 401(k) as you near retirement.
Listed below are some retirement income sources that may give you the funds you need:
Reverse mortgages:Reverse mortgage eligibility is determined by the qualifications listed below.
Must be 62 years of age or older
Must own a substantial amount of equity in their home
Must live in their home permanently
For older Americans who are 62+ and have considerable equity in their homes, a reverse mortgage may be a viable option to supplement fixed income sources. A reverse mortgage loan allows retired homeowners to convert the equity they have in their homes into cash to be used as they see fit for expenses like healthcare or costs associated with aging in place. The funds can be distributed in the form of fixed monthly payments, a line of credit, a lump sum, or a combination of those options. The best part? You never have to pay back the loan, and the funds you receive aren’t considered taxable income by the IRS.
If you’re curious about what your reverse mortgage loan proceeds might be, you can use GoodLife’s reverse mortgage calculator to get an estimate.
Reverse Mortgage Calculator
Investment portfolio: Your retirement portfolio is extremely important. The sooner you start putting money away into a retirement account, the longer you allow your money to grow. Again, it’s best to consult a financial planner, so you pick a mix of stocks and bonds that match your long-term goals and complements your current risk tolerance.
Annuities: An annuity is simply a contract you make with an insurance company in exchange for an upfront investment that gives you payments for the rest of your life.
Social Security: As mentioned above, many retired Americans rely on Social Security benefits during retirement. The main question you’ll have to ask yourself when you factor in your monthly benefit payment is, “When should I start to take my Social Security benefits?”
You have the option to claim your benefits as early as age 62, but if you do, you forgo getting even bigger monthly payments if you wait until your full retirement age. Your full retirement age is dependent on your birthday but is generally between 66-67 years of age.
Social Security benefits for 2019 average around $1,461 a month. For most retirees, this isn’t enough to get by comfortably.
Pensions: Only 14% of US workers have pensions but if you do have one, you’ll need to decide between getting a lump sum payout or a stream of income.
Retirement planning and average retirement income
The average monthly retirement income is just that: an average. It doesn’t necessarily encompass all the different variables that are going into your particular retirement income plan. With that said, you can still use the numbers for national retirement income as a yardstick to compare your own savings and earnings. If you find that your savings are falling short of your financial goals, there are a variety of options available to retirees, including reverse mortgages. If you’d like to explore reverse mortgage solutions for your own retirement, contact one of our Reverse Mortgage Specialists to find out more.
Median retirement income for seniors is around $24,000; however, average income can be much higher. On average, seniors earn between $2000 and $6000 per month. Older retirees tend to earn less than younger retirees. It's recommended that you save enough to replace 70% of your pre-retirement monthly income.
According to data from the BLS, average incomes in 2021 after taxes were as follows for older households: 65-74 years: $59,872 per year or $4,989 per month. 75 and older: $43,217 per year or $3,601 per month.
As of 2022, the average monthly benefit amount from Social Security for couples was $2,739.10. That works out to about $32,868 in annual income. Of course, the income that you can expect to receive depends a lot on your circ*mstances.
But moving forward, you'd be able to take tax-free distributions from your Roth IRA. How much does the average 70-year-old have in savings? Just shy of $500,000, according to the Federal Reserve.
First, let's look at some statistics to establish a baseline for what a solid retirement looks like: Average monthly retirement income in 2021 for retirees 65 and older was about $4,000 a month, or $48,000 a year; this is a slight decrease from 2020, when it was about $49,000.
Whether you can retire on $3,000 a month depends on several factors, including your living expenses, retirement savings, and Social Security benefits. If you have a low living cost and can supplement your income with a part-time job or a generous pension, then retiring on $3,000 a month is certainly possible.
To accomplish this, financial experts say you'll need between 70-80% of your pre-retirement income. So, for example, a couple earning $60,000 per year would need between $42,000 ($60,000 x .70) and $48,000 ($60,000 x .80) each year during retirement.
According to the Social Security Administration (SSA), the average monthly retirement benefit for Security Security recipients is $1,781.63 as of February. Several factors can drag that average up or down, but you have the most control over the biggest variable of all — the age that you decide to cash in.
It also depends on when you are retiring. If you are retiring at 70 — when you get the most from Social Security — and have $500,000, you will be in a much better place than retiring at 60 with no Social Security or Medicare.” It's also possible to retire on $500,000 — or less — if you have access to a pension.
Social Security offers a monthly benefit check to many kinds of recipients. As of February 2023, the average check is $1,693.88, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.
That means that many will need to rely on Social Security payments—which, in 2021, averages $1,544 a month. That's not a lot, but don't worry. There are plenty of places in the United States—and abroad—where you can live comfortably on $1,500 a month or less.
However, according to the Federal Reserve's “Report on the Economic Well-Being of U.S. Households in 2019,” 60% of Americans either do not realize if they're on track or are unsure if they're on track. The Federal Reserve's most recent data reveals that the average American has $65,000 in retirement savings.
Experts say investors usually need about 80% of their pre-retirement income in retirement. So if they earned $100,000 per year pre-retirement, they'd need $80,000 per year in retirement. Investors who live well below their means will need less than 80% of their pre-retirement income when they leave the workforce.
Experts advice to have 10x of your annual salary saved by retirement age at 65. The average person aged 65-74 has $1,217,700 in net worth. The median net worth is $266,400.
Yes, you can! The average monthly Social Security Income in 2021 is $1,543 per person. In the tables below, we'll use an annuity with a lifetime income rider coupled with SSI to give you a better idea of the income you could receive from $500,000 in savings.
Although 65 is a conventional retirement age, reaching this point with $2 million is quite a feat. This sum can generate investment and interest income to support you well in the decades to come. However, saving this amount takes effort. And it's crucial to allocate it properly among asset types.
The quick answer is “yes”! With some planning, you can retire at 60 with $500k. Remember, however, that your lifestyle will significantly affect how long your savings will last.
The Social Security disability five-year rule allows people to skip a required waiting period for receiving disability benefits if they had previously received disability benefits, stopped collecting those benefits and then became unable to work again within five years.
About 40% of older Americans rely exclusively on Social Security for retirement income, according to recent research from the National Institute on Retirement Security.
Ecuador. If you're looking for a country where you can retire outside the US comfortably with $800 per month and experience one of the most ecologically diverse places in the world, then Ecuador might be for you. The go-to city for US retirees in Ecuador is Cuenca, which also happens to be a UNESCO World Heritage site.
Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.
What percentage of the U.S. population has $3 million dollars? According to The Kickass Entrepreneur, there are about 5,671,000 households in the U.S. that have a net worth of $3 million or more. This represents 4.41% of all U.S. households.
For many years, a common objective for individuals was to save a nest egg of at least $1 million in order to live comfortably in retirement. Reaching that sum would, in theory, allow the individual to sustain themselves on their retirement investment income generated annually.
The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2023, your maximum benefit would be $3,627. However, if you retire at age 62 in 2023, your maximum benefit would be $2,572. If you retire at age 70 in 2023, your maximum benefit would be $4,555.
The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67. The chart below lists the full retirement age by year of birth.
Retirees who wait to claim can get hundreds of dollars more each month than those who take benefits early. However, only 5% of men and 7% of women wait until 70, according to Social Security Administration data.
How much do people save for retirement? In 2019, about 50% of households reported any savings in retirement accounts. Twenty-one percent had saved more than $100,000, and 7% had more than $500,000.
Few Americans have saved more than $200,000: 4% have between $200,000 and $350,000, 4% more have $350,001 to $500,000 and a little more than 5% have more than $500,000.
Yes, you can! The average monthly Social Security Income check-in 2021 is $1,543 per person. In the tables below, we'll use an annuity with a lifetime income rider coupled with SSI to estimate better the income you could receive off a $750,000 in savings.
Although to some degree it might seem as if billionaires and millionaires in the U.S. shouldn't be collecting Social Security, the truth is there is no law against it, and mathematically it makes sense. Social Security isn't simply a welfare program, with money handed out to anyone who asks.
Final pay of $80,000: benefit of $1,744 monthly, $20,929 yearly. Final pay of $100,000: benefit of $2,026 monthly, $24,315 yearly. Final pay of $125,000: benefit of $2,407 monthly, $28,889 yearly.
However, there are some general guidelines you can follow. If you want a comfortable retirement, you should aim for a retirement nest egg of at least $500,000. This will give you a monthly income of $2500, enough to cover basic expenses and live a modest lifestyle. Of course, this is just a general guideline.
You can retire comfortably on $1,300 per month, and it's one of the best countries for quality of life. What's more, English is widely spoken, and you can use your US money anywhere across the country. The country also offers first-rate hospitals, and many of its doctors are US trained.
This means that if you make $100,000 shortly before retirement, you can start to plan using the ballpark expectation that you'll need about $75,000 a year to live on in retirement. You'll likely need less income in retirement than during your working years because: Most people spend less in retirement.
Whether you can retire on $3,000 a month depends on several factors, including your living expenses, retirement savings, and Social Security benefits. If you have a low living cost and can supplement your income with a part-time job or a generous pension, then retiring on $3,000 a month is certainly possible.
14% of Americans Have $100,000 Saved for Retirement
Most Americans are not saving enough for retirement. According to the survey, only 14% of Americans have $100,000 or more saved in their retirement accounts. In fact, about 78% of Americans have $50,000 or less saved for retirement.
If your highest 35 years of indexed earnings averaged out to $100,000, your AIME would be roughly $8,333. If you add all three of these numbers together, you would arrive at a PIA of $2,893.11, which equates to about $34,717.32 of Social Security benefits per year at full retirement age.
The point is that if you earned $120,000 per year for the past 35 years, thanks to the annual maximum taxable wage limits, the maximum Social Security benefit you could get at full retirement age is $2,687.
Introduction: My name is Rueben Jacobs, I am a cooperative, beautiful, kind, comfortable, glamorous, open, magnificent person who loves writing and wants to share my knowledge and understanding with you.
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