Average Retirement Income: Where Do You Stand? (2024)

FAQs

What is considered a good retirement income? ›

What Is a Good Retirement Income? According to AARP, a good retirement income is about 80 percent of your pre-tax income prior to leaving the workforce. This is because when you're no longer working, you won't be paying income tax or other job-related expenses.

On average, Americans have around $141,542 saved up for retirement, according to the “How America Saves 2022” report compiled by Vanguard, an investment firm that represents more than 30 million investors.

Retirement Savings When You're in Your 50s & Beyond

Average savings: The average savings for those 55-65 is $197,322, and the average for those over 65 is $216,720. Your "official" retirement age is usually defined by when you're eligible to receive full Social Security benefits.

Average monthly expenditures for those 65 and older — including rent, groceries and healthcare — stand at around $4,345, according to the latest government data. In 2016, retirement-age Americans were getting away with spending nearly a thousand dollars less at $3,564.

A recent study determined that a $1 million retirement nest egg will last about 19 years on average. Based on this, if you retire at age 65 and live until you turn 84, $1 million will be enough retirement savings for you.

In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved. If you're looking to be in the minority but aren't sure how to get started on that savings goal, consider working with a financial advisor.

According to data from the Federal Reserve's most recent Survey of Consumer Finances, the average 65 to 74-year-old has a little over $426,000 saved. That's money that's specifically set aside in retirement accounts, including 401(k) plans and IRAs.

“Some retirees have defined it as having enough money to cover all of their expenses, while others have defined it as being able to do the things they love. Still others have defined it as a combination of both.” Most people usually focus on a financial metric when it comes to defining a comfortable retirement.

While the average retirement age is 61, most people can't collect their full Social Security benefits until age 67 (if you were born after 1960).

Monthly mortgage payments make sense for retirees who can do it comfortably without sacrificing their standard of living. It's often a good choice for retirees or those just about to retire who are in a high-income bracket, have a low-interest mortgage (under 5%), and benefit from the deduction on mortgage interest.

How much does the average American have in savings 2022? ›

This data is the latest available from this source but is from 2019, and some sources put average savings even higher: Northwestern Mutual's 2022 Planning & Progress Study revealed that the average amount of personal savings (not including investments) was $62,086 in 2022.

Although healthcare costs take up an increasingly large chunk of overall expenses in retirement, for most retirees the biggest expense is the same one they faced throughout much of their adult lives: housing. Overall housing costs don't just include monthly mortgage or rent payments.

If you have a low living cost and can supplement your income with a part-time job or a generous pension, then retiring on $3,000 a month is certainly possible.

They spent more time on things like personal care, eating, household activities, shopping, leisure, civic activities and talking on the phone. In all, a typical retiree took 2.5 hours per day away from activities like work and added those 2.5 hours into activities like leisure. Too much T.V. Not enough travel.

The historical S&P average annualized returns have been 9.2%. So investing $1,000,000 in the stock market will get you the equivalent of $96,352 in interest in a year. This is enough to live on for most people.

The average net worth for a 60-year-old in America is about $200,000 in 2022. However, for the above-average 60 year old who is very focused on his or her finances has an average net worth closer to $2,000,000.

If you retire at age 65 and expect to live to the average life expectancy of 79 years, your three million would need to last for about 14 years.

Putting that much aside could make it easier to live your preferred lifestyle when you retire, without having to worry about running short of money. However, not a huge percentage of retirees end up having that much money. In fact, statistically, around 10% of retirees have $1 million or more in savings.

The above chart shows that U.S. residents 35 and under have an average of $30,170 in retirement savings; those 35 to 44 have an average $131,950; those 45 to 54 have an average $254,720; those 55 to 64 have an average $408,420; those 65 to 74 have an average $426,070; and those over 70 have an average $357,920.

So, can you retire at 60 with $1 million, and what would that look like? It's certainly possible to retire comfortably in this scenario. That said, it's wise to review your spending needs, taxes, health care, and other factors as you prepare for your retirement years.

How many seniors have no savings? ›

About 50% of women ages 55 to 66 have no personal retirement savings, compared to 47% of men.

Your net worth is what you own minus what you owe. It's the total value of all your assets—including your house, cars, investments and cash—minus your liabilities (things like credit card debt, student loans, and what you still owe on your mortgage).

The Average Debt for Those 65-74

In a perfect world, you would be debt-free by the time you retire. That scenario is not realistic for many Americans, however. Householders in this age group who have debt carry an average debt of $105,250.

Once you have an estimate of your annual retirement spending, you can begin to work out how much you need overall by multiplying your annual spending by the number of years you expect to spend in retirement, figuring in an extra 3% per year for inflation.

One frequently used rule of thumb for retirement spending is known as the 4% rule. It's relatively simple: You add up all of your investments, and withdraw 4% of that total during your first year of retirement.

Older people, in particular, may enjoy a greater sense of well-being because of the availability of Social Security and private pension benefits that provide them with income after they retire. For many retirees, pensions provide a significant percentage of income in retirement.

People retiring early in this study were significantly less likely to die from a stroke or cardiovascular diseases. An analysis in the US in 2018 found that seven years of retirement can result in as much as a 20% reduction in the chance of getting a serious condition such as diabetes or heart disease.

Early research on the relationship between retirement and happiness is derived from psychology, and mainly describes the relationship between retirement and happiness. These studies concluded that retirement is associated with lower life satisfaction, depression, and lower happiness (9, 10).

And yet, more and more Americans are still carrying a mortgage when they reach retirement age. According to a 2019 report from Harvard's Joint Center for Housing Studies, 46% of homeowners ages 65 to 79 have yet to pay off their home mortgages. Thirty years ago, that figure was just 24%.

Is it smart to pay off your house before retirement? ›

Paying off your mortgage early frees up that future money for other uses. While it's true you may lose the tax deduction on mortgage interest, you'll have to reckon with a decreasing deduction anyway as more of each monthly payment applies to the principal, should you decide to keep your mortgage.

Across those 50 metros, an average of about 19% of homeowners who are 65 and older still have a mortgage. We also found that homes owned by people in this age group tend to be less valuable than those owned by the general population — and that their monthly housing costs tend to be lower.

In fact, you should really aim to have an emergency fund with enough money to cover three to six months' worth of essential bills. But according to the 2022 Personal Capital Wealth and Wellness Index, only 53% of Americans are in a position to handle an unforeseen $500 expense without worry.

How much retirement should I have at 60? A general rule for retirement savings by age 60 is to aim to have about seven to eight times your current salary saved up. This means someone earning $75,000 a year would ideally have between $525,000 to $600,000 in retirement savings at that age.

Average Household Retirement Income 2022:

Mean Income – $71,446 (down from $84,153 in 2019)

The answer as to whether $500,000 is “enough” for you to retire at 60 might be completely different than someone else looking to do something similar. Generally speaking, you can retire at 60 with $500,000, but you may not like how much income you have or it may not be enough for your needs.

In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved. If you're looking to be in the minority but aren't sure how to get started on that savings goal, consider working with a financial advisor.

If your retirement expenses are $4,095 * 12 months = $49,140 (annual income) divided by 0.04 = $1,228,500. So yes, to collect just over $4,000 per month, you need well over a million dollars in retirement accounts.