# What Is the Average Retirement Income and How Do You Compare?

If saving for retirement is one of your primary financial goals, like it is for many people, you may be wondering how much income you’ll need to live comfortably after you retire. One way to answer this question is to determine the average retirement income in the U.S. and then base your estimate on this.

The U.S. Census Bureau reports the average retirement income for Americans over 65 years of age as both a median and a mean. In 2019, the figures were as follows:

• Median income: \$47,357
• Mean income: \$73,288

## What’s the Difference?

Obviously, there’s a big difference in average retirement income based on whether you’re talking about the median or the mean number. The mean retirement income is about one-third higher than the median retirement income. So what’s the difference?

Median retirement income is calculated by listing every retirees’ income in order, from lowest to highest. The number right in the middle — with half of retirement incomes higher and half lower — would be the median.

Mean income is calculated by adding all retirement income and dividing this by the total number of U.S. retirees or households. According to statisticians, the median number is probably more representative of the actual average retirement income in the U.S. than the mean number. This is because households with higher retirement income tend to skew the mean calculation toward the high side.

## Trends Worth Noting

Breaking down the data by retiree or household age reveals some interesting trends. In particular, the older the retiree or household, the less the average retirement income. Here are median and mean incomes for retirees in different age brackets, according to the U.S. Census Bureau’s Current Population Survey (CPS) Annual Social and Economic (ASEC) Supplement:

Age of Household Median Income Mean Income
Households Aged 55-59 \$73,711 \$102,203
Households Aged 60-64 \$64,846 \$91,543
Households Aged 65-69 \$53,951 \$79,661
Households Aged 70-74 \$50,840 \$73,028
Households Aged 75 and Over \$34,925 \$54,416

Note that the median retirement income for households aged 60-64 is nearly twice as much as the median retirement income for households aged 75 and over. The difference is even more stark for single retirees: According to the Pension Rights Center, half of all single Americans who are 65 years of age or over have an average retirement income of less than \$24,224 per year.

Keep in mind that these are national averages. However, the cost of living varies greatly from one area of the country to another so the averages aren’t necessarily useful for comparison unless they’re further broken down by region. For example, a median income of \$54,000 for a retired 65-year-old couple living in the rural Midwest would probably allow for a more comfortable retirement lifestyle than the same income would for the same age couple living in a high-cost metropolitan area like New York City or San Francisco.

## Where Does Retirement Income Come From?

There are four main sources of retirement income for most Americans:

1. Financial assets — These include retirement savings vehicles like IRAs, 401(k)s and annuities. According to a survey conducted by Transamerica Retirement Services, 48% of workers anticipate these will be their main source of retirement income. And a separate survey conducted by the Pension Rights Center found that 66 percent of retirees currently receive income from these types of financial assets.
2. PensionLess than one-third (31%) of Americans are retiring with a defined benefit pension plan today. For those who do retire with a pension plan, the median annual pension benefit is \$9,262 for a private pension, \$22,172 for a federal government pension, and \$24,592 for a railroad pension.
3. Social Security — The majority of Americans 65 years of age and over — 84%, to be exact — receive monthly benefits via the Social Security Old Age, Survivors and Disability Insurance (OASDI) program. Keep in mind that ever since this benefit was created in 1935, it has been intended to supplement retirement income — not be the only source of retirement income — for most Americans.
4. Continuing employment — The idea of retirement has begun to change in recent years as many people at or near the traditional retirement age choose to continue working on a part-time basis after they “retire.” The Bureau of Labor Statistics (BLS) projects that a third (32%) of 65-to-74-year-olds and 11% of those age 75 and over will be working at least part-time in 2022.

## How to Boost Average Retirement Income

Here are a few strategies to boost average retirement income.

• Max out retirement savings accounts each year. In 2020 you and your spouse can each contribute up to \$6,000 to a traditional or Roth IRA, or \$7,000 if you’re age 50 or over; up to \$13,500 to a SIMPLE IRA, or \$16,500 if you’re 50 years of age or over; and up to \$19,500 to a 401(k), 403(b), 457, or \$26,000 if you’re 50 years of age or over.
• Choose the right pension distribution option. With most pension plans, you can choose a one-time, lump-sum distribution or a monthly payment. There are several different factors you should consider to determine which option will result in the most retirement income for you. These include how the pension is being funded, whether inflation adjustments are made to monthly payments, and the options for survivor benefits if you’re married.
• Delay receiving Social Security benefits. You’re eligible to start receiving Social Security benefits when you turn 62 years old. However, the longer you wait to start claiming benefits, the larger your monthly benefit will be. If you start receiving benefits at age 62, this may result in a benefit reduction of up to 30 percent. But if you wait until age 70 to start receiving Social Security, you’ll receive the largest benefit possible.
• Look into public assistance or Veteran’s Administration benefits. According to the Pension Rights Center, about 7 percent of retirees receive financial assistance from government sources, with the median annual benefit ranging from \$5,866 to \$6,542. This assistance can help low-income retirees pay for healthcare expenses as well as help cover the cost of meals, utilities and legal services. Visit BenefitsCheckUp, which is maintained by the National Council on Aging, to search for financial assistance programs you might qualify for.

## Next Steps for You

Free, online tools can give you the confidence to ensure you’re headed to a financially secure retirement. Consider trying the Personal Capital Retirement Planner, which can help you assess and plan for your retirement income needs.

Get Your Free Tools

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Amin Dabit is the Vice President of Advisory Services at Personal Capital. Amin brings over a dozen years of experience in private wealth management and financial planning. Amin leads Personal Capital's advisory team to identify and establish strategies for reaching clients' financial goals by providing comprehensive, customized financial advice designed to improve their financial lives.

## Retirement news & tips straight to your inbox.

Must be a valid email address

To learn what personal information Personal Capital collects, please see our privacy policy for details.