Imagine standing on the edge of an exciting new chapter – retirement. For many, it’s a time of exploration, relaxation, and reaping the rewards of a lifetime of work. The key to unlocking this dream? Retirement income. It’s the cornerstone of your financial stability and the quality of life you’ll enjoy later.

The journey toward understanding your retirement income and planning your retirement budget accordingly might seem complex, but fret not! We’re here to make it simple by looking into the most important factors to achieve a financially stable retirement.

In 2023, according to a report from the U.S. Census Bureau, the average retirement income stands at a promising $75,254 annually. If you’re more into month-to-month finances, that equates to approximately $4,381 monthly. But remember, these figures represent the ‘average’ American retiree. Your income during retirement can swing either way depending on several factors, such as your age at retirement, income during your working years, and how much you’ve tucked away into your savings.

What are some common sources of retirement income?

  1. Social Security: As it stands, Social Security remains the bread and butter of retirement income for many Americans. In 2023 the average monthly Social Security benefit stands at roughly $1,827. But, relying on something other than this as your retirement income is wise. The purpose of Social Security is to enhance your retirement savings, not to serve as a substitute for them.
  2. Pensions: Once a staple of retirement income, pensions are slowly fading into the background as fewer and fewer employers offer them. If you’re one of the lucky ones still receiving assistance, consider it a valuable component of your retirement income.
  3. 401(k)s and IRAs: These tax-advantaged retirement savings plans are essential tools to help you squirrel away funds for your golden years. Your income from these sources will be determined mainly by your contribution amounts and your investments’ performance. Therefore, saving as much as possible and contemplating consulting a financial advisor to refine your investment tactics is advisable.
  4. Annuities: Think of annuities as insurance policies for your retirement. They guarantee a consistent income stream for the duration of your life. However, they come with a price tag, so do your due diligence before investing in an annuity plan.

Initiating your savings plan early allows your money more room to accumulate over time. Knowledge is a key asset, so it’s crucial that you fully grasp the sources of your retirement income and the realistic amounts you should expect. This comprehension will empower you to make reasonable decisions regarding your financial future, ensuring a relaxed and safe retirement. Be proactive, strategize early, save diligently, and make educated choices to relish your retirement phase fully!

Average retirement income by state

StateSingleMarried Couple
Alaska$4,907$8,814
California$3,978$7,956
Colorado$4,358$8,716
Florida$3,936$7,872
Hawaii$5,390$10,780
Idaho$4,221$8,442
Illinois$4,075$8,150
Indiana$3,841$7,682
Iowa$4,150$8,300
Kansas$4,007$8,014
Kentucky$3,876$7,752
Louisiana$3,795$7,590
Maine$4,278$8,556
Maryland$4,125$8,250
Massachusetts$4,405$8,810
Michigan$3,952$7,904
Minnesota$4,258$8,516
Mississippi$3,712$7,424
Missouri$3,907$7,814
Montana$4,318$8,636
Nebraska$4,065$8,130
Nevada$4,523$9,046
New Hampshire$4,368$8,736
New Jersey$4,455$8,910
New Mexico$3,998$8,096
New York$4,328$8,656
North Carolina$3,896$7,792
North Dakota$4,140$8,280
Ohio$3,936$7,872
Oklahoma$3,805$7,610
Oregon$4,328$8,656
Pennsylvania$4,075$8,150
Rhode Island$4,378$8,756
South Carolina$3,866$7,732
South Dakota$4,107$8,214
Tennessee$3,886$7,772
Texas$3,917$7,834
Utah$4,328$8,656
Vermont$4,445$8,910
Virginia$4,125$8,250
Washington$4,405$8,810
West Virginia$3,722$7,444
Wisconsin$4,188$8,376
Wyoming$4,463$8,926
Source: U.S. Census Bureau

The table shows the average monthly retirement income for single individuals and married couples in each State. The data is based on a 2022 U.S. Census Bureau report.

The table shows that single individuals’ average monthly retirement income ranges from $3,712 in Mississippi to $4,907 in Alaska. The average monthly retirement income for married couples ranges from $7,424 in Mississippi to $8,814 in Alaska.

There are a few things to remember when interpreting the data in the table:

  1. The data is just an average, so your actual retirement income may be higher or lower depending on your circumstances.
  2. The data only includes some sources of retirement income, such as pensions, annuities, and Social Security.
  3. The data is based on 2022, so it may need to be revised for 2023.

Despite these limitations, the table can be a useful starting point for understanding how much retirement income you may need. If you are planning for retirement, it is important to consider your circumstances and ensure you have enough income to cover your expenses.

Here are some additional things to keep in mind when interpreting the data in the table:

  • The cost of living varies from State to State, so you may need more than the average retirement income to cover your expenses in a high-cost state.
  • The amount of retirement income you need will depend on your individual lifestyle and spending habits.
  • It might be essential to bolster your retirement income with additional revenue sources, such as Social Security, pension plans, or part-time jobs.

It is essential to do your research and talk to a financial advisor to get a more accurate estimate of how much retirement income you will need.

What is the average retirement income for a single person?

On average, a solo retiree in the U.S. pockets about $4,381.25 per month, which translates to roughly $52,575 yearly, according to figures from the U.S. Census Bureau. But this number is merely an average. There’s a multitude of single retirees who’re bringing in considerably less than this. If you’re looking at the middle ground, the median retirement income for a lone retiree sits at $27,413 per year.

On average, a solo retiree in the U.S. pockets about $4,381.25 per month, which translates to roughly $52,575 yearly,

What is the average monthly retirement income for a couple?

The typical American couple, come 2023, is looking at an average monthly retirement income of about $4,381.25. How did we get to this figure? We started by looking at the median income for married-couple households who are 65 years and older, which comes up to $75,819. However, the mean income for this group is slightly higher, clocking in at $108,225.

Keep in mind; this is a ballpark figure. The precise income a couple receives in retirement will pivot on various factors, including what they were pulling in pre-retirement, their savings, and their entitlement to Social Security benefits. But the $4,381.25 figure gives couples a general idea when planning for their golden years.

Here’s a snapshot of a few more variables that could shape the retirement income a couple has at their disposal:

– Their years clocked in the workforce

– The nature of the jobs they held

– The chunk of change they managed to sock away

– The level of Social Security benefits they’re eligible for

– The cost of living where they reside

Planning for retirement is not something you leave till the last minute. It’s a marathon, not a sprint. Couples must plan early to maintain a relaxing lifestyle when work is a thing of the past. Building up savings and making savvy investment choices can go a long way toward securing a comfortable retirement.

What is an excellent monthly retirement income?

The amount of retirement income you need will depend on a number of factors, including your lifestyle, health, and expenses. However, a good rule of thumb is to aim for 70-80% of your pre-retirement income. For example, if you earned $50,000 per year before retiring, you would need approximately $35,000-$40,000 per year in retirement. 

A good retirement income is generally 70-80% of your pre-retirement income.

Indeed, this is merely a basic guideline, and your specific requirements might vary based on your situation. If you’re dealing with a significant debt, you may require more income to handle your repayments. Similarly, if your healthcare needs are costly, you may need an increased income. Each situation is unique.

Here are some other factors to consider when determining how much retirement income you need: 

  • Your age: As you age, your expenses may increase, especially for healthcare. 
  • Your location: The cost of living can vary significantly from place to place. If you live in a high-cost area, you will need more income to maintain your standard of living.
  • Your lifestyle: If you plan to travel extensively in retirement, you will need more income to cover your expenses.

It is essential to start planning for retirement early to have enough time to save and invest. You can use a retirement calculator to help you estimate how much income you will need. 

Here’s how you can determine how much retirement income you need: 

  • The 50-30-20 rule suggests that you should allocate 50% of your income to needs, 30% to wants, and 20% to savings.
  • The 4% rule: This rule of thumb suggests you can withdraw 4% of your retirement savings each year without running out of money. 
  • The Social Security Administration: The Social Security Administration (SSA) offers a retirement calculator that assists you in projecting your future Social Security benefits.

Conclusion

Understanding average retirement income, median retirement income, and what is the average pension payout is crucial for effective retirement planning. The average retirement income provides a benchmark for assessing financial goals, while the median retirement income offers insights into income distribution. Social Security benefits, personal savings, and employer-sponsored plans can help individuals secure a comfortable retirement. Analyzing regional differences and following essential tips for retirement planning will contribute to a successful and financially stable retirement.

Remember, retirement planning is a personal journey, and seeking professional advice tailored to your needs is highly recommended.

References

•July 25, 2023