If saving for retirement is one of your primary financial goals, as it is for many people, you may be wondering how much income you will need to live comfortably after retirement. One way to answer this question is to determine the average retirement income in the United States and then base your estimates on it.
Of US Census Bureau report The average retirement income for Americans over the age of 65 and the median in both the latest figures for 2019, were as follows:
- Median Retirement Income: $ 47,357.
- Average retirement income: $ 73,288.
The difference between average and average income
Obviously, there is a big difference in average retirement income depending on whether you are talking about median or average number. The average retirement income is about one-third higher than the average retirement income. So what’s the difference?
Median retirement income is calculated by entering the maximum and maximum income of each retiree. The correct number in the middle – half of the retirement income with more and half with less – will be median.
Average income is calculated by including all retirement income and dividing it by the total number of U.S. retirees or households. According to statisticians, the median number is probably the highest of the actual average retirement income in the United States. This is because the calculation of households with the highest retirement income tends to go higher.
Breaking average retirement income in 2021.
Breaking data from retirement or home age reveals some interesting trends. In particular, the average retirement income is lower for people of retirement or household age. Are here Average and average income of retirees in different age brackets.According to the US Census Bureau. Current Population Survey (CPS) Annual Social and Economic (ASEC) Supplement.:
|Domestic age||Average income||Average income|
|Domestic age 55-59.||73,711.||$ 102,203.|
|Domestic age 60-64.||$ 64,846.||91,543.|
|Household age 65-69.||$ 53,951.||$ 79,661.|
|Domestic age 70-74.||$ 50,840.||$ 73,028.|
|Homes are 75 and older.||$ 34,925.||54,416.|
Note that the average retirement income for households aged 60-64 is double the average retirement income for households aged 75 and over. The difference is even greater for single retirees: According to the Pension Rights Center, half of all single Americans are 65 years of age or older. The average retirement income is less than 24,224 a year..
Remember these are national averages. However, the cost of living varies greatly from one region of the country to another, so averages are not necessarily useful for comparison unless they are further broken down by region. For example, an average income of 54 54,000 for a retired 65-year-old couple living in the rural Midwest would potentially allow for a more comfortable retirement lifestyle than those of the same age living in the same costly metropolitan area. For a couple of New York City or San Francisco.
Where does retirement income come from?
There are four main sources of retirement income for most Americans:
- Financial assets – These include retirement savings vehicles such as IRAs, 401 (k) s and annuals. according to a Survey conducted by TransAmerica Retirement Services, 48 workers believe that this will be the main source of their retirement income. And a separate one. Survey conducted by the Pension Rights Center It was found that 66% of retirees currently earn income from these types of financial assets.
- Pension – Less than a third (31) of Americans are retiring. Today with a definite benefit pension plan. For those who retire with a pension plan, The benefit of an average annual pension. نجی 9,262 for private pension, 22 22,172 for federal government pension and 24 24,592 for railway pension.
- social Security The majority of Americans 65 years and older – 84%, to be exact – Receive monthly benefits through Social Security Aging, Survivors and Disability Insurance. (OASDI) program. Keep in mind that since this benefit was created in 1935, it has been intended to meet retirement income – not the only source of income for most Americans.
- Continuous employment. The idea of retirement has begun to change in recent years as many people choose to continue working on a part-time basis after or near the traditional retirement age. The Bureau of Labor Statistics (BLS) estimates that one-third (32%) of people aged 65 to 74 and 11% of those aged 75 or over Working at least part-time in 2022..
How much retirement income will you need?
There is no one-size-fits-all answer to how much income will be enough in retirement. It depends on the lifestyle you want to live and your expected expenses. But here are some good “rules” to help you determine how much income you will need in retirement.
A good place to start is to find out what sources of income you expect to earn in retirement. social Security? Pension plan? 401k or split from IRA? Rental income? Once you have identified these sources, you can begin to estimate how much you think each one will benefit you.
Financial planners will generally suggest that you plan between 70% and 80% of your retirement income before you retire. This reflects the fact that you will no longer have any expenses associated with working, buying work clothes, and eating out for lunch.
So, once you estimate your expected annual sources of income in retirement and how much you expect to earn from each one, see that it’s about 70-80 of your working income. This is usually a great way to gauge if you are on the right track, but as we have discussed, each situation is unique, so it is best to consult someone. financial advisor Establish a personal plan for your retirement income. For more details on retirement income planning strategies, see our recent article on the topic. Here
How To Increase Average Retirement Income
Here are some strategies to increase the average retirement income.
- Maximum retirement savings accounts each year. A good way to help your future in retirement is to maximize or contribute to any tax retirement savings account (such as 401k or IRA).
- Select the correct pension distribution option. With most Pension plans, You can choose a one-time, unilateral distribution or monthly payment. There are a number of different factors that you should consider to determine which option will earn you the most retirement income. These include how the pension is being funded, whether the inflation adjustment can be made into monthly payments, and the benefits of surviving benefits if you are married.
- Delay in receiving Social Security benefits. You are eligible for Social Security benefits when you turn 62. However, the longer you wait to start claiming benefits, the greater your monthly benefit will be. If you start reaping the benefits at age 62, you can lose up to 30%. But if you wait until you reach the age of 70 to get Social Security, you will get the biggest benefit.
- See the benefits of public support or ex-military administration. About 77% of retirees, according to the Pension Rights Center. Get funding from government sources.The median annual benefit ranges from $ 5,866 to $ 6,542. This assistance can help low-income retirees meet the costs of health care, as well as food, utilities and legal services. Visit Benefits check up., Which is maintained by the National Council on Aging, to find financial aid programs for which you may be eligible.
Next steps for you.
Free, online tools can give you confidence that you are heading for a financially secure retirement. Consider trying. Personal Capital Retirement Planner, Which can help you assess and plan your retirement income needs.