What Is the Average Income for a Retired Couple?

Understanding the financial landscape of retirement is a fundamental aspect of long-term financial planning. For couples, comprehending typical income levels after ending their working careers provides a valuable benchmark for setting financial goals and assessing preparedness. A clear picture of average retirement income helps couples anticipate their financial needs, ensuring a secure and comfortable future.

Understanding Reported Averages

When examining income for retired couples, it is important to distinguish between statistical measures like mean and median. The mean, or average, is calculated by summing all incomes and dividing by the number of recipients, which can be skewed by a few very high incomes. The median income represents the middle value in a sorted list, with half of incomes falling above and half below this point, often providing a more representative view. For married couples aged 65 and older, the median before-tax income was $84,670 in 2023. This figure indicates that half of all retired couples in this age group had an income below this amount, and half had an income above it.

This median income for couples contrasts with broader averages for individuals in the 65 and older demographic. For instance, the median income for all Americans aged 65 and older was $54,710, while the mean income for this group was $83,950. These national figures provide a general benchmark, but individual circumstances can vary significantly. These statistics typically refer to household income, which for retired couples, combines the financial resources of both individuals.

Primary Sources of Retirement Income

Retired couples typically draw income from a diverse array of sources. Social Security benefits represent a primary income component for most, providing a consistent monthly payment derived from lifetime earnings. The amount received is based on an individual’s average indexed monthly earnings over their 35 highest-earning years. For couples, both spouses may be eligible for benefits based on their own work records or their spouse’s record.

Pension plans, particularly defined benefit plans, represent another significant source of income for some retirees. These plans, increasingly rare in the private sector but still prevalent in government employment, promise a specified monthly benefit at retirement, often calculated using a formula based on salary and years of service. The employer bears the investment risk, ensuring a guaranteed income stream. This contrasts with defined contribution plans, such as 401(k)s and Individual Retirement Accounts (IRAs), where retirement income depends on contributions and investment performance.

Income from retirement savings accounts, including 401(k)s and IRAs, becomes accessible without penalty at age 59½, though withdrawals are subject to ordinary income tax. Required Minimum Distributions (RMDs) from traditional accounts generally begin at age 73. Investment income from non-retirement accounts, such as dividends, interest, and capital gains, also contributes to a couple’s financial resources, with long-term capital gains and qualified dividends often taxed at lower rates than ordinary income.

Some retired couples choose to continue working part-time or engage in consulting, which can provide supplemental income and help preserve retirement savings. Rental income from properties can offer an additional stream of funds, though it is subject to income tax.

Influences on Retirement Income Levels

Various factors contribute to differences in retirement income among couples. The level of pre-retirement earnings and consistent savings habits during working years directly impact future Social Security benefits and retirement account balances. Higher lifetime earnings translate to larger Social Security payments and greater potential for retirement savings growth. Consistent contributions to retirement plans over decades allow for compounding returns, substantially increasing the final retirement nest egg.

Age and health status also play a substantial role in shaping a couple’s retirement income profile. Older couples might have different income streams and expenses compared to those who retire younger. Health expenditures can significantly impact disposable income, as unexpected health issues can lead to substantial out-of-pocket expenses, potentially drawing down savings more rapidly. Planning for potential healthcare costs is an important aspect of retirement financial strategy.

Geographic location affects the purchasing power of a retired couple’s income due to variations in the cost of living. Housing, groceries, transportation, and healthcare costs differ considerably across states and regions. An income level might provide a comfortable lifestyle in a lower cost of living area, but feel insufficient in a high-cost urban center. This disparity can influence decisions about where to reside in retirement.

Marital status and the availability of survivor benefits also influence a couple’s income stability. Social Security provides survivor benefits to eligible spouses upon the death of a worker, offering financial support to the surviving partner. Personal choices regarding work in retirement, such as continuing part-time employment or consulting, can directly augment a couple’s income, allowing them to delay drawing from savings or Social Security.