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Average Retirement Income

Wondering how your retirement savings stack up to other Americans’ nest eggs? Or whether your income in your post-work years will be enough to keep you afloat? It’s normal to be curious about the average retirement income in the U.S. Just remember that you need enough in your retiree days to meet your own needs, not to keep up with the Joneses. A financial advisor can help you create a financial plan to reach your retirement goals.

Average Social Security Retirement Income

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. In general, single people depend more heavily on Social Security checks than do married people. In 2021, the average monthly retirement income from Social Security was $1,543. In 2022, the average monthly retirement income from Social Security is expected to be $1,657.

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 rather than waiting until your full retirement age (or age 70, if you want maximum benefits), then you can expect a small 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.

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 would 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 From Savings

Average 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.

According to the National Institute on Retirement Security, almost 40 million households have no retirement savings at all. The Employee Benefit Research Institute (EBRI) estimates in its 2019 Retirement Security Projection Model that America’s current retirement savings deficit is $3.8 trillion. What does that mean? Well, the EBRI report aggregates the savings deficit of all U.S. households headed by someone between the ages of 35 and 64, inclusive. In total, those households have $3.8 trillion fewer dollars in savings than they should have for retirement.

Research by the Federal Reserve found that the median retirement account balance in the U.S. (among those who have retirement accounts at all) was just $65,000 in 2019. Now consider that recent estimates put a retired couple’s medical costs at $200,000, assuming both retire at 65, the man lives to 82 and the woman lives to 85. It’s not a pretty picture.

Drawing Down Retirement Income

According to Gallup, the average retirement age is now 62. 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 follow a 4% annual withdrawal rate – isn’t fool-proof. 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 before you touch Roth accounts, to meet a specific lifestyle (either extravagant, similar to today, modest or budget-conscious). No 4% rule here.

Bottom Line

Average Retirement Income

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 financial advisor to develop, implement and fine-tune a financial plan for your retirement goals. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one 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.

Photo credit: © Catherine Yeulet, ©, ©

Amelia Josephson Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia's work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
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