Retirement planning can feel like trying to hit a moving target. Just when you think youve figured out the magic number for a comfortable monthly retirement income, issues like rising costs, market shifts or lifestyle changes shift the goalposts. Adding to the uncertainty right now, though, is the fact that the economic environment is in flux. With issues like inflation trending slightly above the Federal Reserves long-term target and ongoing healthcare price increases, many retirees are reassessing what they thought was enough.
In general, though, retirees in the U. S. spend an average of around $5,000 per month to cover living expenses, healthcare, travel and leisure activities. This is only an average, though. Some households get by on far less, while others need significantly more to maintain the lifestyle they want. Social Security continues to provide a base level of income—the average monthly payment in 2025 is $1,976—but most households need other sources of income to fill in the gaps and pay for extras.
Given all of these factors, how do you figure out what a “good” retirement income really is? And how can you make your retirement income bigger to reach your goal?
Dreaming about retirement? Wondering if your $5,000 monthly budget will be enough to live comfortably when you finally say goodbye to the 9-to-5 grind? You’re not alone! This is one of the most common worries for folks approaching their golden years.
The good news is that $5,000 a month can pay for a comfortable retirement in many places in the US and other countries. If you plan ahead, you might even be able to live quite well on this budget.
Is $5,000 Monthly Enough for Retirement?
New financial data shows that many retirees need between $60,000 and $100,000 a year, or $5,000 to $8,300 a month, to live comfortably. If you want to save $5,000 a month, you’re on the lower end of that comfortable range. This is totally doable if you know what you’re doing!
The Bureau of Labor Statistics reports that U. S. People aged 65 and up who lived in their own homes spent an average of $64,326 in 2023. But here’s the interesting part: an Employee Benefit Research Institute survey found that 2068% of retirees actually spend less than $40,000 a year, or $3,333 a month.
This means $5000 monthly puts you ahead of what most retirees are actually spending!
What Goes Into Your Retirement Budget?
Before we dive into where you can live comfortably on $5,000 monthly, let’s break down what typically goes into a retirement budget:
- Housing (mortgage/rent, property taxes, insurance, maintenance)
- Healthcare (Medicare premiums, supplemental insurance, out-of-pocket costs)
- Food and groceries
- Transportation
- Utilities
- Entertainment and travel
- Miscellaneous expenses
The old rule of thumb says you’ll need about 80% of your pre-retirement income to maintain your lifestyle. However, this varies widely based on your individual circumstances and retirement dreams.
Sources of Retirement Income
So where does that $5,000 monthly come from? Let’s look at the typical income buckets:
- Social Security – The average monthly benefit for retired workers in December 2024 was $1,975 (or about $23,700 annually)
- Investment portfolio – 401(k)s, IRAs, and other retirement accounts
- Annuities – Guaranteed income streams you can purchase
- Part-time employment – Though don’t bank on this long-term!
- Pensions – Less common today but valuable if you have one
Always keep in mind that Social Security only replaces a third of the income most people had before they retired. You’ll need to save and invest the rest of the money.
Amazing Places to Retire on $5,000 a Month
Now for the fun part! Where can you live your best retired life on $5,000 monthly? Here are some fantastic options:
1. New Orleans, Louisiana
- Why it’s awesome: Amazing history, culture, food scene, and jazz music
- Cost of living: 12% above the national average
- Median monthly rent: $1,967
- Perks: Social Security isn’t taxable, low state tax rate on other income
- Weather: Generally warm year-round (with occasional hurricane risk)
With rent taking up about $2,000 of your budget, you’d still have $3,000 for other expenses and enjoying all that New Orleans has to offer.
2. Nashville, Tennessee
- Why it’s awesome: Live music scene, bustling downtown, mild climate
- Cost of living: 2% lower than the national average
- Median monthly rent: $1,455
- Perks: No state income tax!
- Weather: Mild with distinct seasons
Nashville offers a well-rounded lifestyle at a reasonable price. Plus, no state income tax means your $5,000 goes even further.
3. Indianapolis, Indiana
- Why it’s awesome: Cultural attractions, affordable housing, central location
- Cost of living: 7% lower than the national average
- Median monthly rent: $1,135
- Perks: Social Security isn’t taxable, low flat tax rate on other income
- Weather: Distinct seasons with cooler winters
With housing costs dramatically lower than the national average, Indy leaves plenty of your budget free for travel, hobbies, and family activities.
4. The Villages, Florida
- Why it’s awesome: Ultimate retirement community with over 3,000 clubs, 50+ golf courses
- Cost of living: 3.6% above the national average
- Median monthly rent: $2,500
- Perks: No state income tax!
- Weather: Warm and sunny most of the year
If you’re looking for a retirement-focused community with endless activities and amenities, The Villages is hard to beat.
5. San Juan, Puerto Rico
- Why it’s awesome: Beach access, tropical climate, vibrant culture
- Cost of living: 22% lower than the national average
- Median monthly rent: $575 (yes, really!)
- Perks: No federal income tax
- Weather: Tropical, warm year-round (with hurricane risk)
With incredibly low housing costs and no federal income tax, your $5,000 monthly budget could feel like much more in beautiful Puerto Rico.
More Budget-Friendly Retirement Spots
If the above locations don’t tickle your fancy, here are some more affordable options where $5,000 monthly will go far:
Top Picks in Florida
- Winter Haven – Super affordable with median rent of just $943
- Dunedin – Great livability score (88/100) with rent around $1,175
- Bradenton – Beautiful Gulf Coast location with $1,329 average rent
Other Affordable Gems
- Georgetown, Texas – High livability (87/100) with $1,131 median rent
- Oro Valley, Arizona – Beautiful desert setting with cost of living just 3.6% above national average
- Catalina Foothills, Arizona – Gorgeous mountain views with monthly expenditures around $1,888
Tips to Make $5,000 Monthly Work in Retirement
Wanna stretch that money even further? Here are some practical tips:
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Downsize your housing – Consider selling a larger family home and moving to something more manageable
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Relocate to a lower cost-of-living area – As our list shows, where you live makes a HUGE difference in how far $5,000 goes
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Delay Social Security – Each year you wait (up to age 70) increases your benefit by about 8%
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Consider a Roth conversion ladder – Converting traditional retirement funds to Roth before retirement can reduce taxes later
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Create a detailed budget – Track your spending for several months before retirement to get a realistic picture
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Plan for healthcare costs – Medicare doesn’t cover everything, so budget for supplemental insurance
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Look into tax advantages – Some states don’t tax Social Security benefits or retirement account withdrawals
Common Questions About Retiring on $5,000 Monthly
Is $5,000 a month good for retirement?
Yes! With $5,000 monthly ($60,000 annually), you’re at the lower end of what financial experts consider “comfortable” for retirement. But as our research shows, most retirees actually spend less than this amount, so you’re in good shape!
How do I convert my savings into $5,000 monthly income?
Many financial advisors suggest the 4% rule – withdrawing about 4% of your retirement savings annually. To generate $60,000 yearly ($5,000 monthly), you’d need about $1.5 million in retirement savings. However, this doesn’t account for Social Security or other income sources.
Will I have to pay taxes on my $5,000 retirement income?
It depends on your income sources. Social Security is partially or fully tax-exempt depending on your total income. Traditional 401(k) and IRA withdrawals are usually taxable, while Roth account withdrawals are tax-free. Your state of residence also matters – some states don’t tax retirement income at all!
Can I retire earlier with $5,000 monthly?
Possibly! The earlier you retire, the longer your money needs to last. However, if you’ve saved enough and have planned carefully (including for healthcare before Medicare eligibility), early retirement could be within reach.
Real Talk: The Challenges of Retiring on $5,000
I wanna be straight with you – while $5,000 monthly is workable, it does come with some challenges:
- Inflation – What costs $5,000 today will likely cost more in 10-20 years
- Healthcare surprises – One major health issue could strain your budget
- Housing market fluctuations – Rent can increase or housing values can change
- Unforeseen expenses – From home repairs to helping family members
To protect against these challenges, I recommend:
- Building an emergency fund even in retirement
- Considering long-term care insurance
- Staying flexible with your budget
- Possibly maintaining some income-producing activities
Final Thoughts: Yes, You CAN Retire on $5,000 Monthly!
The bottom line? $5,000 per month can absolutely provide a comfortable retirement, especially if you’re strategic about where you live and how you manage your money.
Many retirees are living their best lives on less than this amount! With careful planning, budget management, and perhaps relocation to a more affordable area, you could enjoy a fulfilling retirement without financial stress.
Remember that retirement planning isn’t one-size-fits-all. Your ideal retirement might look totally different from your neighbor’s or friend’s. The key is figuring out what matters most to you, then creating a plan that prioritizes those things while keeping your financial security intact.
So yes – you CAN retire on $5,000 a month! And now you’ve got lots of info to help make it happen. What retirement spot on our list appeals to you most? Would you consider relocating to make your retirement dollars go further?
What’s a good monthly retirement income in 2025?
The answer to this question isnt as straightforward as you might hope, and thats actually by design. Financial planners have moved away from universal recommendations because retirement needs can vary wildly based on factors like your location, lifestyle and health considerations. Generally, though, a good retirement income is about 75% to 85% of the pre-tax income earned in your last working year, according to financial planning experts. But lets translate that into real numbers. For someone earning $120,000 annually before retirement, this threshold means needing between $90,000 and $102,000 per year in retirement, or about $7,500 to $8,500 in monthly retirement income.
Thats unfortunately not what most Americans actually have saved, though. According to the latest data, the average retirement income in the United States in 2025 for individuals is approximately $60,000 per year, which includes income from both high earners and lower-income retirees. The median retirement income, which is typically a better indicator of what the average retiree has saved, is closer to $47,000 annually, or around $3,900 per month, however. For married couples, the numbers are higher, with average retirement income around $100,000 annually, or about $8,300 per month.
But heres where factors like geography become crucial. Living costs will be higher for people who retire in states or areas with high costs of living, so they will likely need a lot more than the average retirement amount to live comfortably. Meanwhile, retirees in lower-cost states might stretch their dollars much further.
So, the key takeaway is that “good” is relative. People who are retired in lower-cost areas might be fine with a few thousand dollars a month, but people who live in expensive cities might need a lot more to maintain the same level of living. Its also important to consider the other unexpected costs you may face during retirement, such as long-term care, home repairs or family obligations.
How to add guaranteed income streams to your retirement portfolio
In todays economic landscape, smart retirement planning means thinking beyond traditional savings accounts. It requires, in many cases, the creation of multiple income streams that can weather market volatility and inflation. And, there are a few ways you can do that.
Annuities offer the closest thing to a personal pension in todays retirement landscape. These insurance products provide a guaranteed stream of income for a set period or even for life. There are different kinds of annuities, such as immediate annuities that start paying right away and deferred annuities that start paying in the future.
Reverse mortgages are another option worth considering for homeowners aged 62 and older. Reverse mortgages are designed to help retirees who are asset-rich and cash-poor. A reverse mortgage can convert a portion of your home equity into monthly payments or a line of credit that only needs to be repaid when you move out permanently, die or sell your home.
Social Security optimization is another strategy that may be worth employing. By waiting until age 70 to claim Social Security, you can boost your benefit checks by 24% compared to claiming at full retirement age (which is 66 or 67, depending on the year in which you were born). The maximum monthly benefit for high earners who delay until age 70 exceeds $5,000 in 2025.
A good monthly retirement income in 2025 is less about a specific number and more about meeting your unique needs while maintaining flexibility. Start by estimating your essential expenses, then layer in discretionary spending and factor in inflation and potential surprises, too. Ultimately, the goal is to create a portfolio of income sources that allows you to live comfortably, confidently and on your own terms.
Angelica Leicht is the senior editor for the Managing Your Money section for CBSNews.com, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.