Average Retirement Income 2021: How Do You Compare?

Whether you’ve already retired or you’re planning ahead, it can help to know where everyone else falls when it comes to retirement income.

Stephanie Faris
Published November 2nd, 2020
Updated January 1st, 2021
Table of Contents
Key Takeaways
  • Population averages are typically made up of two major calculations: mean and median data.
  • Although you can calculate averages, every person’s individual circumstance affects the income needed to retire comfortably.
  • Factors like the average pension amount are also important to consider when you’re weighing averages.

Whether you’ve already retired or you’re planning ahead, it can help to know where everyone else falls when it comes to retirement income. By taking a look at what typical retirement income looks like, you can start to determine how your own finances stack up.

But it’s important to keep in mind, as you research what is the average retirement income, that everyone’s circumstances are unique. You may be able to live well on Social Security alone, while your neighbor or friend may find that retirement savings or a part-time job is necessary to pay the bills. Keep these statistics in mind, but set your budget based on your own financial needs.

Average & Median Retirement Income 2021

Although the last comprehensive census data is from 2017, the Census Bureau does keep population tables going all the way up to the most recent full year. Those tables show that the median 65-plus income for 2019 was $47,357. The mean income for that same year was $73,288.

Understanding Mean and Median

When you’re looking at income averages for any population, you’ll see the number expressed in two terms: mean and median. A mean number is the result of adding a group of values (usually numbers) together and dividing the total by the number of values. Median values come if you group a list of numbers together. The one in the middle is the “median.” So the answer to what is a good monthly retirement income isn’t as cut and dried as it seems.

One example of that is how the numbers change when additional filters are added to it. If you look at the average retirement income by ZIP code, you may find that your income falls in line with the lower or high income levels in your area. Compare that to the typical income for your age bracket and you’ll get a more accurate picture of where you stand.

Average Retirement Income 2021 by Household Age

When you look at the U.S. Census’s population tables, one thing that stands out is just how much retirement income drops as a household’s population changes. The most-recent provided numbers are for 2019, but you’ll recall the overall median income for senior citizens is $47,357, with a mean income of $73,288.

Unfortunately for older retirees, the table shows that the high end of those averages is set by those between the ages of 65 and 74. Here’s how the average retirement income in US breaks down:

Age RangeMedian IncomeMean Income
65-74$56,632$84,153
75 and over$37,335$58,684

Main Sources of Retirement Income

You’ve probably heard for years that you should set aside a percentage of income for retirement, but how much does that really come into play? Overall, Social Security income makes up a relatively small percentage of the average retirees’ income. That means most senior citizens are getting their income from other sources.

What is retirement income including for many of these retirees? We have the breakdown for you.

Average Social Security Income 2021

Social Security makes up, on average, only 33.5 percent of the income for elderly recipients. For single recipients in June 2020, the average monthly payout was $1,514, which would be $3,006 for a married couple with both parties receiving the average. Only 21 percent of couples and 45 percent of single people rely on Social Security for 90 percent of their income.

Average Retirement Income from Assets 2021

With Social Security providing less than half of retiree income, many will need to rely on assets like savings. According to the Pension Rights Center, though, only 66 percent of retirees receive income from financial assets. Of that 66 percent, half receive less than $1,754 each year.

Average Retirement Income from Pensions

Retirees with monthly pensions are financially better off, on average, than those without. The median income of retirees who use Social Security benefits as their sole source of income is $15,871. The average pension in the U.S. may be double that, looking at how income changes once a pension is attached. Retirees with private pensions have an annual income of $36,270. That annual income bumps up to $38,806 if it’s a federal pension and $37,789 if it’s another type of pension, such as local government or military. Those monthly pension dollars go a long way to fund the basic expenses of retirement.

Average Retirement Income from Work

The latest data available on income in older adults comes from information pulled from government sources by the Pension Rights Center. Although the median income from all sources for seniors in 2018 was $25,601, the income for seniors without earned income drops to $20,440. Only one in five of all older adults continue to earn income after retirement.

Average Public Assistance Income

The percentage of older adults relying on public assistance is 7 percent, according to the Pension Rights Center. Veterans’ benefits account for 3 percent of that number, though, with the other 4 percent being resources like Supplemental Security Income (SSI) and the Supplemental Nutrition Assistance Program (SNAP). The median benefit for older adults receiving public assistance is between $6,600 and $6,900.

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The biggest trend of 2021 is actually something that’s been in progress for a while. The average pension per person may not have changed much, but the number of people earning a pension has steadily declined over the past few decades. This trend is only expected to continue as private employers shift to defined contribution plans like 401(k)s, which require the employer to contribute to their future retirement savings.

While there are concerns about the future of retirement due to population increases and longer life expectancies, the Urban Institute has better news. The social and economic policy research institute released a report on the future of retirement and, despite reports of lower average retirement savings by income, the study made some interesting conclusions, including:

  • The average retirement income by age will increase as those born between 1966 and 1975 reach the age of 70. The report predicts this group of retirees will have a 17 percent higher average household income than pre-Baby Boomers.
  • The news is even better for the generation born between 1976 to 1985, who the Urban Institute predicts will have a 24 percent higher household income at age 70 than pre-Boomers.
  • Women earners will increase average annual income. There’s no denying more women are earning full-time salaries than those who were born 40 years earlier. The Urban Institute predicts that their retirement savings and Social Security income will put them in much better standing after retirement.

One ongoing concern mentioned in the report is Social Security. As younger generations ask what is a good retirement income, it’s important to consider what might happen if lawmakers someday cut Social Security benefits. Many of the Urban Institute’s projects rely on those funds still being available to retirees 10, 20, and 30 years from now.

Final Thoughts

Funding your retirement doesn’t have to be complicated. You simply look at your finances and determine how much you’ll need. But it can help to take a look at what the norm is when it comes to retirement, just as long as you consider factors like the average retirement income by state, age, and marital status. For best results, we recommend getting to know the numbers and working with a Certified Financial Planner® to make sure you’re adequately prepared.

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Author
Stephanie Faris

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a writer for a credit card processing service and has written about finance for numerous marketing firms and entrepreneurs. Her work has appeared on Money Under 30, The Motley Fool, MoneyGeek, E-commerce Insiders, and GoBankingRates.

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