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Do you know how you’ll fund your retirement? Do you know how much you’ll need to live comfortably during your non-working years? These are tough questions that many people don’t spend enough time considering.
According to a three-part survey conducted by CNBC, over 70% of Americans received a serious financial wake-up call during the COVID-19 pandemic. These days, people all over the country are thinking more about their long-term money goals and keeping a closer eye on how they’re doing in reaching them.
One popular way to refine your goals and gauge your progress is to review the average retiree income levels in the U. S. , along with other key retirement statistics. Your situation may be different than that of the average person, but a benchmark can be informative, especially when you can dial into specific categories of data, such as age groups.
According to the latest data from the United States Census Bureau, the median annual income for individuals aged 65 and older is $47,620, while the mean annual income is $75,254. A few other income data points for people of retirement age are illustrated below.
There are a lot of people like you who worry about having enough money to retire comfortably. When people are making plans for retirement, one of the main questions they have is how much money they’ll need each month to keep living the way they do now. If you’re just starting to save or getting close to retirement age, knowing how much money the average retiree makes each month can help you set goals that are attainable.
I’ve researched the latest data to give you a clear picture of what retirement actually costs in America today. Let’s dive into the numbers and see if your retirement savings are on track!
The Current State of Retirement Income in America
According to the Bureau of Labor Statistics, the average retired person lives on approximately $4,345 per month. This figure comes from 2021 data showing that individuals 65 and older spent an average of $52,141 annually, while their average income was about $55,335.
Another interesting fact is that this amount is about $14000 less than what the average person spends each year ($66,928). This means that retirees usually spend about 80% of what they spent while they were working.
Most retirees, though, spend a lot less than these averages show. The Employee Benefit Research Institute did a survey in 2022 that said:
- 48% of retirees spend less than $2,000 per month
- About one-third spend between $2,000 and $3,999 monthly
- Only 18% spend more than $3,999 per month
This big range shows that how much people spend in retirement depends a lot on their situation, where they live, and the choices they make about their lifestyle.
Retirement Income Varies Widely By State
Where you live can significantly impact how much retirement income you’ll need. According to an analysis of Census Bureau data the average household retirement income in the United States is $27617, but this varies tremendously by state.
The state with the highest average retirement income is the District of Columbia at $43,080 per year, while Indiana has the lowest at just $20,542. That’s more than a $22,500 difference!
Here’s a look at some states with particularly high or low retirement incomes:
Highest Retirement Income States:
- District of Columbia: $43,080
- Alaska: $36,023
- Maryland: $35,732
- Virginia: $35,306
- California: $34,737
Lowest Retirement Income States:
- Indiana: $20,542
- West Virginia: $21,118
- Arkansas: $21,967
- Iowa: $22,308
- North Dakota: $23,347
Generally, Northeastern and West Coast states have higher retirement incomes, while Southern and Midwestern states tend to have lower averages.
Where Does Retirement Money Actually Go?
Understanding what retirees spend their money on can help you better plan for your own retirement. Let’s break down the major expense categories:
1. Housing (The Biggest Expense)
Despite the fact that approximately 80% of individuals over 65 own their homes, housing still represents about one-third of monthly expenses for retirees. In 2021, the average housing expense for those 65 and older was $18,872 annually.
This includes:
- Owned dwellings: $6,864
- Rented dwellings: $2,759
- Utilities and public services: $3,921
- Household operations: $1,442
- Home furnishings and equipment: $2,303
Housing costs were reported as the fastest-growing expense among seniors in 2020-2021, coinciding with the peak of housing appreciation (17.8%).
2. Healthcare
Healthcare is another significant expense that tends to increase with age. In 2021, the average amount spent on healthcare by those 65 and older was $7,030.
Medical expenses were reported as the fastest-growing expense among seniors in 2020-2021. About 65% of adults aged 65+ reported paying more than $2,000 for out-of-pocket medical expenses in 2021.
Don’t forget that in 2023, the baseline monthly premium for Medicare Part B was $164.90, and this typically increases each year.
3. Transportation
Even though fewer retirees drive compared to younger individuals, transportation remains a substantial expense. In 2021, those 65 and over spent an average of $7,160 on transportation.
This breaks down as:
- Vehicle purchases: $2,777
- Gasoline: $1,396
- Other vehicle expenses: $2,707
- Public transportation: $279
On average, retirees allocated about 12% of their monthly income to transportation costs in 2020-2022.
4. Food
In 2021, food was both the most frequently reported and fastest-growing expense among seniors. Retirees reported allocating about 25% of their monthly income to food expenses.
The breakdown shows:
- Food at home: $4,497
- Dining out: $1,994
About 73% of the average food budget went to groceries, while 27% was spent on eating out.
5. Debt
Debt can significantly impact retirement comfort. Among retirees in 2022:
- 96% reported having some form of debt
- 40% had credit card debt
- 30% had mortgage debt
- 23% had car loans
Though most retirees (89%) described their debt as either “easily manageable” or “manageable,” about 11% found their debt to be unmanageable or crushing.
The 80% Rule: Is It Accurate?
Financial advisors often suggest that retirees need about 80% of their pre-retirement income to maintain their lifestyle, and interestingly, the actual spending data seems to support this guideline.
As Ashley Weeks, vice president of wealth strategies for TD Wealth, points out: “The standard rule of thumb is that you want to have 80% of pre-retirement income.” However, he also acknowledges that “That’s a pretty broad stroke.”
In reality, your retirement needs will depend on your individual circumstances, location, and lifestyle choices.
Sources of Retirement Income
So where does this money come from? Most retirees rely on a combination of:
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Social Security – Almost 90% of people age 65 and older receive Social Security benefits. As of December 2024, the average monthly benefit for retired workers was $1,975 (annual income of $23,700).
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Retirement accounts – Income from 401(k)s, IRAs, and other retirement savings accounts.
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Pensions – Though becoming less common, traditional pensions still provide income for many retirees.
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Part-time employment – Many retirees continue to work part-time.
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Annuities – Guaranteed income products purchased from insurance companies.
Financial advisor Joe Conroy puts it well: “You can have a great retirement on $5,000 a month, and you can have a great retirement on $50,000 a month.” The key is aligning your income with your specific needs and expectations.
Tips for Living Comfortably on a Fixed Retirement Income
If you’re concerned about having enough money in retirement, here are some practical tips:
1. Downsize your housing
Moving to a smaller home can significantly reduce mortgage/rent, property taxes, and utility costs.
2. Relocate to a lower-cost area
Consider moving to a state with a lower cost of living and lower taxes. The difference can be substantial!
3. Cook at home more often
Eating out is expensive. Cooking at home not only saves money but can also be healthier.
4. Utilize senior discounts
Many businesses offer discounts for seniors – don’t be shy about asking!
5. Manage debt before retiring
Try to pay off high-interest debt before retiring to reduce monthly obligations.
6. Consider a part-time job
Even a few hours a week can provide supplemental income and social engagement.
7. Be strategic about Social Security
Delaying benefits until age 70 can significantly increase your monthly payment.
How Much Do YOU Need to Retire?
While knowing the averages is helpful, your personal retirement needs may be very different. Here’s a simple approach to estimate your needs:
- Track your current monthly expenses
- Adjust for expenses that will change in retirement (commuting costs will decrease, healthcare might increase)
- Multiply by 12 to get your annual needs
- Apply the 80% rule as a starting point, then refine based on your specific situation
Remember that retirement doesn’t have strict rules. As Christopher Abts, a financial advisor with Prime Capital Financial, notes: “No one wants to retire to a lower lifestyle.” Most people want to maintain their current standard of living, which means your current spending habits are often the best predictor of your retirement needs.
Final Thoughts
The average monthly retirement income of $4,345 provides a useful benchmark, but your personal situation may require more or less. The wide variation in retirement incomes across states (from $20,542 to $43,080) demonstrates that there’s no one-size-fits-all answer.
What’s most important is understanding your own needs and developing a plan to meet them. Whether you’re just starting to save or approaching retirement, working with a financial advisor can help ensure you’re on track for the retirement lifestyle you desire.
Understanding Median and Mean
Everybody should have a basic understanding of the median and mean statistics, especially when using them to inform a retirement plan.
Because retirees with higher incomes tend to skew the mean retirement income, the median income is a more accurate measure of the national average.
Generally, the median is more useful than the mean for assessing average retirement income. This is because the mean is skewed by individuals with very large incomes. These outliers can easily pull the metric up into unrealistic territory for average people.
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What Is a Good Retirement Income?
If you’re wondering how much retirement income you need, you’re not alone. Most people wrestle with this question, especially those that lack financial experience, literacy or familiarity with the retirement planning process.
The general rule for a good retirement income is about 75% to 85% of the pre-tax income you made in your last official working year. This rule-of-thumb reflects the following assumptions: you have been saving about 15% of earnings annually, you will maintain a balanced budget and you will pay less in taxes during retirement.
That said, the target percentage may need to be revised upward or downward, depending on your life expectancy, health care costs and retirement lifestyle, which depend on your primary geographic location and travel habits. To get a more accurate idea of what a good retirement income looks like for you, start by fleshing out your future circumstances.
For an age-based benchmark, consider the data points below.
Average Income Broken Down by Age
| Age Range | Median Household Income | Mean Household Income |
|---|---|---|
| 55-59 | $81,866 | $117,851 |
| 60-64 | $71,354 | $109,826 |
| 65-69 | $58,776 | $89,272 |
| 70-74 | $52,678 | $79,860 |
| 75+ | $38,239 | $61,547 |
As illustrated, income typically declines with age. This is largely due to how the typical retiree gradually draws down on his or her retirement portfolio, slowly diminishing its income-generating potential over time.
Unfortunately, the rate of decline can be accelerated by a myriad of retirement risks, including runaway inflation and unexpected health care withdrawals. As a result, sound investment management is important before and after you retire. Fast Fact.
Not all individuals take the traditional path to retirement. Depending on your income level, savings rate and anticipated spending needs, you may be able to retire early. However, saving for retirement is challenging enough; early retirement calls for superb planning and a heightened level of fiscal discipline.
Retire at 60? Shocking Average Savings vs. The REAL Number You Need (Spoiler: It’s Different!)
FAQ
What is a good monthly income for a retired person?
A “good” monthly retirement income varies significantly, but a common benchmark is 70–80% of your pre-retirement income to maintain your lifestyle. For 2025, U. S. Census Bureau data shows the average retirement income for an individual is about $5,000 per month, and for a couple, it is around $8,300 per month, though median incomes are lower.
Is $4000 a month enough to retire on?
If your Social Security and other retirement savings allow you to retire on $4,000 per month, you’re likely in good shape to retire in many cities nationwide or abroad. Aside from the most expensive markets, $48,000 annually is enough for a comfortable retirement for many retirees.
How much do most retirees live on a month?
Key Takeaways. The average retired household spends around $5,000 per month, with housing, healthcare, and food being the largest expense categories. With a median 401(k) balance of $210,724, retirees relying on the 4% withdrawal rule and Social Security benefits often face a shortfall in covering monthly costs.
Is $5000 a month enough to retire on?
Whether $5,000 a month is enough to retire on depends on your individual lifestyle, location, and the cost of healthcare and housing. $5,000 a month can be enough for some people to live comfortably in retirement, especially if they live in a low-cost area and don’t have to pay a mortgage.
How much money does a retired person make a month?
However, according to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month. This means that the average retired person lives on about $4,345 per month. However, this is just an average, and your individual needs may be higher or lower.
What is the average retirement income for a single person?
My analysis of single household averages estimates the average retirement income for a single person, including money from all income sources, is about $3,596 per month or $43,156 per year.
How much money do you need to live comfortably in retirement?
This means that the average retired person lives on about $4,345 per month. However, this is just an average, and your individual needs may be higher or lower. Several factors can affect how much you need to live comfortably in retirement, including:
What is the average retirement budget?
When it comes to the average retirement budget, studies report a wide range of responses. A 2022 survey by the Employee Benefit and Retirement Institute (EBRI) found that half of individuals around retirement age spend less than $2,000 per month, equal to less than $24,000 per year.
How much do retirees spend a year?
In its survey, for example, households headed by people in the next-youngest group, aged 55 to 64, spent $78,079 per year, indicating a decline of about 26% for people after age 65. Housing is the single largest expense identified by both retiree budget surveys, accounting for a total of around one-third of all costs in retirement.
How much money does a 65 year old spend on retirement?
The Bureau of Labor Statistics says that people aged 65 and up spent an average of $52,141 in 2021. This is about $14,000 less than the average spending of $66,928 by all people. This suggests that one year of retirement spending amounts to 80% of your annual preretirement income.