What Is the Average Retirement Income?

Retirement income varies widely based on factors like location, career history, and investment choices. While some retirees live comfortably on Social Security benefits alone, others supplement with pensions, 401(k) distributions or part-time work. The reality is that many Americans find themselves with less monthly income in retirement than they anticipated, creating challenges for maintaining their pre-retirement lifestyle. While it’s difficult to pinpoint an average retirement income, the most recent Census Bureau data indicates that people 65 and older have a median annual income of approximately $54,700 or nearly $4,560 per month.

A financial advisor can help you create a retirement plan for the future that meets your long-term needs.

Average Social Security Benefit

We all know that saving for retirement is the wise course of action. That’s why we have Social Security, a form of forced savings that diverts income from our working years to our golden years. Social Security benefits were never designed to be Americans’ sole source of retirement income, though. That’s why saving for retirement, either through an employer-sponsored plan or on your own, is so important.

According to the Social Security Administration, Social Security benefits make up about a third of the income of the elderly. The average Social Security benefit for retired workers was $1,925 per month as of November 2024. Thanks to a 2.5% COLA in 2025, the average benefit is expected to increase to over $1,970 per month.

Keep in mind, though, that your Social Security benefits could be smaller. If you don’t have 35 years of work under your belt when you start claiming benefits, if your earnings were consistently low or if you claim benefits starting at age 62 instead of waiting until your full retirement age (or age 70, if you want maximum benefits), then you can expect a smaller monthly check. There’s also a gender gap in Social Security income. Women, because they tend to earn less and work for fewer years, draw smaller Social Security checks than men do.

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The more money you make during your career, the greater the gap between your income needs and your Social Security benefits. Say you’re a family of four with two high earners, a big fancy home and a high-roller lifestyle. You’ll have a much harder time getting by on Social Security than someone who can handle a lower-middle-class income. That means you’ll need to allocate a healthy sum to retirement savings during your working years or risk a downturn in your quality of life in retirement.

If you’re married, remember that your retirement-related decisions affect your spouse, too. The amount a surviving spouse can get from Social Security depends on the other spouse’s work history and on when that spouse claims Social Security. In other words, the spouses of folks who start claiming Social Security at age 62 will receive less money in survivor benefits.

Average Retirement Income and Savings

What Is the Average Monthly Retirement Income?

You may have heard about an impending retirement income shortfall in the U.S. Words like “crisis” and “disaster” appear in plenty of articles that lament Americans’ lack of retirement savings.

A recent AARP survey found that one in five adults ages 50 and over have nothing saved for retirement, while more than 60% worry they won’t have enough to support themselves later on. Meanwhile, nearly 57 million Americans – almost half of private sector workers – do not even have the option to save for retirement through their jobs, according to the National Institute on Retirement Security.

If you’ve been saving for retirement, you may be wondering how your savings compare to others. Vanguard’s “How America Saves 2024” report shows that the average qualified retirement account balance in 2023 was $134,128, although the median account balance was just $35,286. For those 65 and older, the average and median account balances were $272,588 and $88,488, respectively.

Of course, retirement accounts aren’t the only source of income for retirees. Pensions, annuities, Social Security and wages (if they’re still working) all contribute to how much income a person has in their golden years. According to the Census Bureau’s most recent “Income in the United States” report, the median income for people 65 and older was $54,710 in 2023. That means over a year, the typical person who’s 65 or older has a monthly income of around $4,560.

Drawing Down Retirement Income

Let’s say you’ve done a stellar job of saving for retirement. You’ve decided to hang up your hat and begin the post-work phase of life. How do you know how much you can safely withdraw from your retirement accounts to live on?

Unless you buy an annuity, you’ll have to make that decision based on your spending needs and on the performance of your investments. That’s why the typical recommendation – that a retiree follows a 4% annual withdrawal rate – isn’t foolproof.

Our retirement calculator assumes that you’ll draw down your retirement income in a strategic fashion, letting tax-deferred accounts grow for as long as you can and spending from accounts with required minimum distributions (RMDs) before you touch Roth accounts, to meet a specific lifestyle (either extravagant, similar to today, modest or budget-conscious). No 4% rule here.

Don’t Forget to Budget for Medical Expenses

Also, keep in mind that your medical expenses are likely to increase in retirement and should be factored into your income plan. Fidelity estimates that an average 65-year-old who retires in 2024 “could spend $165,000 on health care in retirement,” illustrating the need for careful planning.

To prepare, consider contributing to a health savings account (HSA) during your working years if you have access to one. HSAs allow you to save pre-tax dollars, grow them tax-free, and withdraw funds tax-free for qualifying medical expenses. For those nearing retirement, look into supplemental Medicare plans, such as Medigap or Medicare Advantage, to help cover costs not included in Original Medicare.

Long-term care insurance is another option to explore, as it can help offset the high costs of extended care, including assisted living or nursing home expenses. Additionally, maintaining a healthy lifestyle by staying active and addressing preventive care needs can reduce future medical costs. Planning with these strategies can ease the financial burden of healthcare in retirement.

Tips to Increase Your Retirement Income

Looking to boost your financial security in your golden years? Maximizing your retirement income requires strategic planning and smart money moves. Here are effective ways to enhance your retirement finances:

Delay Social Security benefits: While you can claim Social Security as early as age 62, waiting until your full retirement age or even age 70 can significantly increase your monthly benefit. For each year you delay claiming beyond your full retirement age, your benefit grows by about 8%, providing substantially more income throughout retirement.

Consider a part-time job or side hustle: Working part-time during retirement not only provides additional income but also offers social engagement and mental stimulation. Many retirees find satisfaction in consulting in their former field, retail positions, or turning hobbies into income-generating activities that fit their desired lifestyle.

Maximize catch-up contributions: If you’re 50 or older, take advantage of catch-up contributions to retirement accounts.

Explore annuities for guaranteed income: Consider purchasing an annuity to create a reliable income stream that can’t be outlived. Fixed annuities provide predictable payments, while variable annuities offer potential for growth, though they come with higher fees and more complexity.

Optimize your withdrawal strategy: Develop a tax-efficient withdrawal plan that considers which accounts to tap first. Many financial advisors recommend withdrawing from taxable accounts first, then tax-deferred accounts, and finally Roth accounts to minimize tax impact and maximize growth potential.

By implementing these strategies to increase your retirement income, you can enjoy greater financial security and peace of mind during your retirement years. Remember that personalized financial advice can help tailor these approaches to your specific situation.

Bottom Line

Social Security benefits are great, but they’re not much on their own. If you want to be able to supplement your Social Security checks with other retirement income, start saving. The earlier you begin contributing to a retirement account, the more financial comfort you can expect in your post-work years. When it comes time to draw down your retirement savings, it’s important to be strategic. This will help you to optimize the savings you worked so hard to accumulate.

Tips on Retirement

Consider working with a fina ncial advisor to develop, implement and fine-tune a financial plan for your retirement goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Are you saving enough for retirement? SmartAsset’s free retirement calculator can help you determine exactly how much you need to save to retire.