The Average Retirement Income in 2023

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Happy retired couple – Yuri A /

Editor's Note: This story originally appeared on NewRetirement.

How are you going to pay for retirement? How is everyone else doing it?

What is the average retirement income for 2023? Has it changed a lot from past years as we put the pandemic behind us and the economy tries to figure out if things are going to get better or worse? Are you anywhere close to average?

Especially given today’s economy. The past year has held mixed financial results for different households.

The rise of inflation has been challenging, and the stock market has remained depressed.

Housing prices have gone lower, but not as low as people have expected, and they have risen in certain areas. As usual, the well off continue to get by just fine and those with fewer resources have struggled more to keep up with rising prices.

Where Do You Stand Now?

Golden eggs representing IRA, 401k, and Roth IRA.
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Where do YOU stand now, and how does that impact your future retirement? Have you been able to keep up with your savings? How will that translate into retirement income?

Figuring out if you are going to have a secure future can be difficult. There are a lot of questions to answer and some things can be estimated by comparing yourself to averages.

However, there is no way YOU are average. When reviewing the numbers below, remember that your retirement security is based on hundreds of different factors.

The best way to plan and feel good about your future is by creating a detailed retirement plan.

Average Retirement Income and the Risk of Running Out of Money

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The Boston College Center for Retirement Research publishes the National Retirement Risk Index (NRRI). It measures the share of American households that are at risk of being unable to maintain their pre-retirement standard of living in retirement.

The index is updated each year.

Most households don’t have enough

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According to their 2023 analysis, the percentage of retirees who are at risk of not having enough is about 50%.

The most recent analysis uses data from 2019, but recent economic factors have been considered. Their conclusion?

“After recalculating the NRRI using the most updated methodology, the bottom line from our previous studies still holds: about half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65 and annuitize all their financial assets, including the receipts from a reverse mortgage on their homes.

“The robustness of the results confirms the retirement saving issue faced by today’s working-age households, and that we need to fix our retirement system so that employer plan coverage is universal. Only with continuous coverage will workers be able to accumulate adequate resources to maintain their standard of living in retirement”.

Read on to see the average projected retirement income numbers for 2023.

Differences Between Mean and Median

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The numbers you will review below represent median income. Median income is closer to the actual average for most households of retirement age. (Mean is the actual average.)

Here are the differences between mean and median.

Mean retirement income

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Mean or average income is calculated by totaling each household’s income and then dividing by the number of households. This number can be very deceiving. Households earning the highest amounts of money will skew the data and make “average” incomes seem high.

In fact, mean (average) is particularly meaningless in 2023. Wealthy households are doing just fine. And, poor households have mostly simply held on or taken on more debt.

Median retirement income

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Median income is determined by organizing all income amounts in order from low to high. The median income is the income in the exact middle of the list with half of the incomes being higher and half being lower.

Many statisticians think that median income is a more representative number.

Median is probably more representative now with increasingly divergent income levels.

What Is Median Income 2023 for All Ages?

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Using data from 2021, the latest available, the median income for all ages in 2023 is $70,784. This represents only a very minor drop from 2020.

Average Retirement Income 2023 by Household Age: Income Falls as Households Get Older

Worried seniors reviewing bills

The median income number above might seem “above average” — relatively healthy. However, the number doesn’t tell the whole story. Nor does it reflect the “retirement crisis” that is so often reported.

And, there is a reason. The number doesn’t show the reality of all retirees — especially those who are older.

Compare the median income and median post-tax income by age of household:

  • Households Aged 45-54: $97,089, $85,444
  • Households Aged 55-64: $75,842, $66,638
  • Households Aged 65-74: $55,474, unknown
  • Households Aged 75 and Older: $36,925, unknown

You see, for most people, retirement income falls dramatically as you age. The median household income for households older than 75 is under half that of the income for households ages 55-64 and significantly below the average for those 45-54.

Much Worse Retirement Income for Single Female Households

Retiree trying to lower her inflation risk
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Declining average retirement income as people age is not the worst of it!

The averages are more distressing for people who are single, especially women. The Pension Rights Center reports that “Half of all Americans age 65 or older have incomes of less than around $25,000 a year — far less than the amount that most need to meet their day-to-day living and health care expenses.”

The 2020 Census Data shows this for median and mean income for non-family (single) female households by age of household:

  • Households Aged 65-69: $28,311, $39,945
  • Households Aged 70-74: $26,558, $37,159
  • Households Aged 75 and Older: $21,666, $32,233

Do Nationwide Averages Matter? What Is the Average Retirement Income in YOUR State?

Man worried about his finances and a recession
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Age matters when it comes to assessing average retirement income. Where you live is another big factor.

The national retirement income averages might be interesting, but not useful to you. After all, there are huge differences in the costs of living and income across different cities and regions in the United States.

  • Highest-earning states: Maryland has the highest average household income at $94,789 followed by the District of Columbia, New Hampshire, New Jersey, and Utah.
  • Lowest-earning states: The lowest average household income is found in Mississippi which at $45,134 is less than half that earned in Maryland. The other lowest income states are West Virginia, Arkansas, New Mexico, and Kentucky.

Compare Your Income to Others in Your ZIP Code

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The Census Bureau will enable you to look up the average income and various other demographic data for your ZIP code. This may be a relevant measure to how you are doing compared to your peers, although it is really important to remember that all that matters is that you have sufficient income for you and your needs.

Using the Census Bureau Search: Find the search here. Plug in your own ZIP code (or in a ZIP code where you might relocate for retirement) and select the fact you would like. They offer “median household income.”

Where Does Most Retirement Income Come From … and How Can You Boost Yours?

concerned older man worrying about finances
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What follows are the top four sources of retirement income for most retirees and how to boost your income from each of them.

1. Average Social Security Income for 2023

Social Security card
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The average monthly Social Security income got an 8.7% boost for 2023 due to rising inflation. This cost of living adjustment (COLA) raised the average monthly Social Security payment to $1,827 a month or approximately $22,000 a year.

NOTE: The average income for female households 75 and over is roughly equal to the average Social Security income.

Social Security was never intended to be a primary source of income. It was only ever intended to supplement retirement income. However, maximizing your payout can really add up over your lifetime!

How to increase your Social Security income

Social Security website
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What is the best way to get more Social Security income? Here are two tips.

Postpone the start

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Postpone collecting your benefits until at least full retirement age or longer (age 70) to get the maximum monthly payment. Delaying the start of Social Security can mean a BIG boost to your overall retirement wealth.

And, more and more retirees are getting the message. It used to be that the most popular age to start benefits was 62. However, now the most popular age for men to start benefits is 66 with 36% starting benefits at that age, followed closely by age 62 with 27% starting at this early age.

The most popular age for women to start is a tie. Thirty-one percent of women start at 62 and another 31% start at 66.

Plan for your spouse’s income, not just your own

Social Security recipients
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If you are married, it is probably a good idea for the higher-earning spouse to defer the start of benefits for as long as possible. As you saw earlier, retirement income for people living on their own is extremely low.

You can help mitigate that problem with the right claiming strategy. Learn more about smart strategies for Social Security if you are married.

2. Average Retirement Income From Assets for 2023

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According to the most recent Transamerica Retirement Survey, 50% of workers expect their primary source of income in retirement to come from self-funded savings such as 401(k)s, 403(b)s, IRAs (38%) or other savings and investments.

The expected reliance on retirement accounts (e.g., 401(k)s, 403(b)s, IRAs) is higher among workers of large and medium companies than those of small companies (45%, 39%, 29%, respectively).

And, the Pension Rights Center reports similar estimates. However, they have found that most older adults have little in savings. Only 66% receive income from financial assets. Half of those receive less than $1,754 a year.

Most people don’t have enough assets to meet their needs. The estimated median for baby boomers’ total retirement savings is inadequate to provide the income needed.

Transamerica reports that workers have saved $93,000 (estimated median) in total household retirement savings as of late 2020. Full-time workers have significantly more in retirement savings at $104,000, which is more than twice as much as the $48,000 part-time workers have saved (estimated medians).

Eighteen percent of workers have saved less than $10,000 in retirement accounts. Seven percent of workers report having $0 in retirement savings, including six percent of full-time workers and 12 percent of part-time workers.

How much retirement income does the average savings produce?

Senior woman worried about money
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If you were to use a common (though flawed) rule of thumb to withdraw 4% each year — adjusting for inflation as you go along — then a savings of $164,000 (a value twice that of the averages cited above) would only produce about $6,560 in retirement income in your first year of retirement.

This is not enough for most households.

How to boost your income from savings

senior couple saving money
Rob Marmion /

This is easy … save more! Okay, maybe not so easy.

  • If you are young, max out your 401(k) contributions and start an IRA. Keep up the contributions, and you’ll have a tidy sum when you retire.
  • If you’re midway through your working years, it’s a little tougher. Be careful about what you spend on family in this phase of your life. Try to focus on making catch-up contributions.
  • Retired or almost retired? Perhaps the best way to boost your retirement income from savings is to actually spend less or work longer! Your savings will last a lot longer if you are spending less (here are 20 ways to cut retirement costs).

You may also want to explore the best way for you to turn your savings into retirement income. Or, explore using a bucket strategy. It maximizes the growth of some of your assets while minimizing risk on others.

Working with a financial adviser to identify opportunities to efficiently turn assets into income can be another good opportunity for you.

3. Average Retirement Income from Pensions

Upset senior reading a document
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The Pension Rights Center has reported that 1 out of 3 older adults have retirement income from a pension. This number is trending further downward. Consider yourself extremely lucky if you have this income!

Very lucky in fact: Older adults who have pensions typically have at least twice the income of those living only on Social Security

The median annual pension benefit ranges between $9,262 for private pensions to $22,172 for a state or local pension, and $30,061 for a federal government pension and $24,592 for a railroad pension.

How to boost your pension income

Woman kissing money
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You cannot exactly boost your pension payments. You can make sure that you are making the right choice between getting monthly payments or a lump sum.

Additionally, you should periodically check with your plan administrator about the health of the funds. Many pensions are underfunded.

If you are lucky enough to have a pension, be sure to use a retirement calculator with pension controls to accurately factor your pension into your overall plan!

4. Average Retirement Income From Work

Older woman working remotely
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Work after retirement could be an important part of retirement income.

Before the pandemic, the Bureau of Labor Statistics reported that increasing numbers of people over 65 and even over 75 would be remaining in the workforce.

However, as of the third quarter of 2021, 50.3% of U.S. adults 55 and older said they were out of the labor force due to retirement, according to a Pew Research Center analysis of the most recent official labor force data.

This indicates that fewer people are working after retirement age than in previous years.

In the third quarter of 2019, before the onset of the pandemic, 48.1% of those adults were retired. In regard to specific age groups, in the third quarter of 2021, 66.9% of 65- to 74-year-olds were retired, compared with 64.0% in the same quarter of 2019.

How to boost retirement work income

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Delaying your retirement is the first option you might want to look at. Or, if you don’t already have a retirement job, you should consider one.

It doesn’t need to be a 9-to-5. It does not need to be high stress. In fact, you should look for work that you really enjoy doing and let the income be a bonus.

Any work income is going to be tremendously beneficial — both financially and for your intellectual and social well-being as well. Explore the benefits of work after retirement and the best jobs for retirees.

Also, have you considered passive income sources?

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