What’s Really in Your Golden Years Money Pot? The Average Income of a Retired Couple Revealed

Are you staring down retirement and wondering if your nest egg will be enough? You’re not alone. With inflation taking bigger bites out of our wallets and prices climbing faster than a squirrel up a tree many couples approaching retirement age are sweating bullets about their financial future.

Let’s cut through the noise and look at what retired couples are actually bringing home these days, where that money comes from, and how you can make sure you’re not left short when it’s time to kick back and enjoy those golden years you’ve worked so hard for.

The Real Numbers: Average Retirement Income for Couples

According to the 2020 Census data, the yearly average retirement income for couples is less than $101,500. But wait – that’s not the whole story! The median income tells a different tale. The median retirement income for couples is only $72,800, which means more than half of retired couples are living on less than this amount annually.

More recent data from 2023 shows the median before-tax income for married couples 65 and older was $84,670, according to the United States Census Bureau.

Looking at monthly figures, the Bureau of Labor Statistics reports that in 2022, the average income after taxes for households between the ages of 65 and 74 was about $5,266 per month. For those over 75, it drops to $3,994 monthly.

These numbers make it clear that there is a wide range in how much retired couples live on. Depending on which end of the range you fall into, your retirement might look very different.

Where Does Retirement Income Come From?

Most retired couples don’t rely on just one source of income. Instead, they piece together a financial quilt from various sources:

1. Social Security Benefits

For many American couples, Social Security forms the backbone of their retirement income. As of July 2024, the average Social Security check was $1,782.74 per person. If both spouses qualify for this amount, a married couple would receive around $3,565 monthly, or just over $43,785 annually.

Remember though, your actual benefit will depend on:

• Your age when you start claiming
• Your lifetime earnings
• How long you worked

2. Retirement Savings and Investments

This includes:

• 401(k) plans
• Traditional and Roth IRAs
• Annuities
• Other investments

A recent Vanguard study estimated that most couples aged 65 and over only have an average of $255,151 in retirement savings – far less than financial experts typically recommend.

3. Pensions

While pensions are becoming less common in the U.S. workplace, they can be a reliable source of income for those who are lucky enough to have one. Most of the time, these retirement plans offered by your employer pay you a set amount every month based on your past salaries and number of years of service.

4. Part-time Work and Side Hustles

Many retirees supplement their income with part-time jobs or side gigs. This not only brings in extra cash but also helps retirees stay active and engaged. Some popular options include:

• Consulting in your former field
• Freelance work
• Pet sitting or dog walking
• Teaching or tutoring
• Driving or delivery services
• Seasonal retail positions

5. Rental Income

Some retired couples earn income from rental properties they’ve acquired over the years.

How Much Do Retired Couples Need?

Financial experts often suggest that retirees need about 80% of their pre-retirement income to maintain their lifestyle after leaving the workforce. So if you and your partner earned a combined $100,000 before retirement, you’d ideally need around $80,000 annually (or $6,600 monthly) to keep living at the same standard.

But this ain’t a one-size-fits-all situation! Your personal retirement needs will depend on:

• Your location: Living in Manhattan versus rural Missouri means vastly different cost profiles
• Health status: Medical expenses tend to increase as we age
• Housing situation: Whether your mortgage is paid off
• Lifestyle choices: Do you plan to travel extensively or live modestly?
• Debts: Outstanding loans or credit card balances
• Inflation: The rising cost of goods and services over time

Common Retirement Expenses to Plan For

When budgeting for retirement, make sure you account for these typical expenses:

• Housing: Even with a paid-off mortgage, you’ll have property taxes, insurance, utilities and maintenance
• Healthcare: Medicare doesn’t cover everything, and out-of-pocket costs can add up
• Food and groceries: Basic necessity that continues into retirement
• Transportation: Car maintenance, gas, insurance or public transit costs
• Travel and leisure: Most retirees want to enjoy their free time
• Long-term care: Potentially significant expense later in retirement
• Taxes: Yes, many retirement income sources are still taxable!
• Insurance premiums: Health, home, auto, and possibly life insurance
• Family support: Many retirees help out children or grandchildren

How Much Should You Save for Retirement?

Different financial experts offer varying benchmarks:

• 10-12 times your final working salary is one common recommendation
• Another suggests having 7-8 times your combined annual salary by age 60

For a couple with a combined income of $100,000, these guidelines would suggest saving between $700,000 and $1.2 million for retirement.

Most financial experts also recommend a withdrawal rate of about 4% per year from your retirement savings to ensure your nest egg lasts throughout your retirement.

Tax Considerations for Retired Couples

How much tax you’ll pay in retirement depends on:

• Your filing status
• Your sources of retirement income
• Your total annual income

For 2024, married couples filing jointly have these federal income tax brackets:

• 10% on income up to $23,200
• 12% on income from $23,201 to $94,300
• 22% on income from $94,301 to $201,050
• 24% on income from $201,051 to $383,900
• 32% on income from $383,901 to $487,450
• 35% on income from $487,451 to $731,200
• 37% on income over $731,200

The good news? The IRS offers an additional standard deduction for seniors (those 65 or older). For married couples filing jointly in 2024, this equals $1,550 per qualifying individual. If both spouses are 65 or older, that’s an extra $3,100 deduction!

Plus, several states don’t tax retirement income at all, including Florida, Alaska, Nevada, South Dakota, Wyoming, and Texas, among others.

Tips for Boosting Your Retirement Income

If these numbers are making you nervous, here are some things you can do to possibly make more money in retirement:

1. Delay claiming Social Security if possible
   Waiting until age 70 can significantly increase your monthly benefit.

2. Think about strategic Social Security claims for couples. If a married couple gets Social Security, have the lower-earning spouse file first and the higher-earning spouse wait until age 70 to get the most benefits.

3. Catch-up contributions
   If you’re over 50, take advantage of catch-up contributions to your 401(k) and IRA.

4. Downsize your home
   Moving to a smaller, less expensive home can free up equity and reduce maintenance costs.

5. Relocate to a lower-cost area
   Moving to a region with a lower cost of living can stretch your retirement dollars further.

6. Work part-time in retirement
   Even a small income can reduce how much you need to withdraw from savings.

7. Reduce unnecessary expenses
   Take a hard look at your budget and cut what doesn’t truly add to your quality of life.

8. Consider a reverse mortgage
   For some homeowners, this can provide additional income without having to sell.

Starting Your Retirement Planning

It’s never too late to improve your retirement outlook. Here are steps to take:

1. Set clear retirement goals
   Define when you want to retire and what lifestyle you hope to maintain.

2. Assess your current finances
   Take stock of your savings, investments, debts, and current income sources.

3. Create a realistic budget
   Estimate what you’ll need annually in retirement, considering inflation and healthcare costs.

4. Maximize retirement account contributions
   Take full advantage of 401(k)s, IRAs, or other retirement savings vehicles.

5. Pay down high-interest debt
   Entering retirement debt-free gives you more flexibility with your income.

6. Build an emergency fund
   Having cash reserves prevents you from tapping retirement accounts prematurely.

7. Consider working with a financial advisor
   Professional guidance can help optimize your retirement strategy.

Wrapping It Up

The average income for retired couples ranges from around $72,800 to just over $100,000 annually, with significant variation based on numerous factors. While these numbers provide a helpful benchmark, your personal retirement needs and goals should drive your planning.

Remember that retirement planning isn’t a one-time event but an ongoing process that requires regular review and adjustments. By understanding the components of retirement income and taking proactive steps to boost your savings, you can work toward a more financially secure future.

Have you started planning for your retirement? What strategies are you using to ensure adequate income in your golden years? Let us know in the comments below!

Typical Net Worth at Retirement