Average Retirement Incomes: Have You Saved Enough for Retirement?

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Do you have enough retirement income to last through your golden years? Understanding how your nest egg compares to the average retirement income can help you plan and save better, to ensure you’re comfortable, secure and happy after retirement.

Average Retirement Income: Mean vs. Median, Other Factors

Before comparing the average earnings of other retirees to your own, consider the difference between “mean” and “median” incomes:

  • Mean Income – Calculated by totaling the income for a number of households and then dividing the total by that number, this is the most common measurement used to determine average incomes. However, if a few households earn a very high income, it can make the resulting average seem higher.
  • Median Income – This is calculated by first arranging each household’s income in an ascending order, where the amount in the exact center of this list is taken as the average income. Calculating median incomes is often considered more effective than mean incomes, since it gives you a more realistic result.

Since median income is almost always lower than mean income for any area, this is the average that you should consider while assessing your own retirement-readiness.

Here are a couple of other factors you should take into account:

  • Where You Live – Cost of living differs from place to place, so look at average retirement incomes in your zip code to understand how your nest egg compares.
  • How Old You Are – The income for a household typically declines as the head of that household gets older. As a result, the average incomes also vary based on age.

→ Related reading: 5 Steps to Get Your Retirement Savings on Track

Mean and Median Incomes in 2017

The following data is the most recent one available from 2017 and compiled in 2018. So, the economic changes seen over the last year might not be necessarily represented. However, the actual numbers should be pretty close. (The data is gathered from Current Population Survey (CPS) Annual Social and Economic (ASEC) Supplement by the US Census Bureau).

  • $73,645 (median) and $103,423 (mean) for household heads between 55 and 59 years of age
  • $63,919 (median) and $89,882 (mean) for household heads between 60 and 64 years of age
  • $54,124 (median) and $79,772 (mean) for household heads between 65 and 69 years of age
  • $46,797 (median) and $68,052 (mean) for household heads between 70 and 74 years of age
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10 Common Sources of Income During Retirement

Most retired individuals receive income from one or more of the following sources:

1. Social Security

For most Americans, Social Security continues to remain a reliable and vital source of retirement income as, unlike most other income sources Social Security benefits are adjusted at regular intervals for inflation. Nearly 30% of Americans still consider Social Security to be a major source of their retirement income and this stat has remained reasonably stable all through the past decade.

2. Work Income

The second most reliable and certain source of retirement income is work income. Also, due to the decline in other retirement investments, Americans are now delaying their retirement or taking up part-time work during their retirement years. Around 22% of Americans in their retirement age are working part-time and this number has nearly doubled since 2001 when only 10% of Americans were working even after their official retirement.

3. Asset Income

A rental property or royalties from a book are two income-producing assets that can generate income even after an individual has retired from the workforce. About 6% of Americans rely on retirement income from royalties and leased properties.

→ Related reading: 11 Ways to Invest in Real Estate (With or Without Buying Property)

4. Pension Plans and Government Sources

Some Americans are fortunate to receive pension during retirement. Down from 34 percent in 2001, today around 24 percent of Americans rely on an employer-sponsored plan to survive through the retirement years. According to Gallup, this is the lowest level recorded in years of doing this survey.

Retired military service members and government employees may receive pension after a predetermined period of 20 or 30 years. This pension is automatically adjusted according to the cost of the living index.

5. Reverse Mortgages

Americans who are 62 years or older and living on a fixed income may also receive income from a reverse mortgage which is legitimately known as home equity conversion mortgage. This allows the homeowner to take the proceeds either as regular payments or as a lump sum. There is no income tax on the money received but since it is a debt, it needs to be repaid to the mortgage lender when the property is sold.

6. Stocks

Americans are also investing in individual stocks or stock mutual funds to generate income during retirement. Around 17% of Americans are relying on mutual funds and stocks but that number has declined over the years due to the risk factor involved.

→ Related reading: Living Off Dividends

7. Home Equity

For many Americans, the bigges