What Is the Average Retirement Income for a Couple?

Retirement planning involves understanding the financial landscape that awaits individuals and couples. A key aspect of this preparation is gaining insight into typical retirement income levels. While national averages provide a general benchmark, it is important to recognize that these figures can vary significantly based on individual circumstances and desired lifestyles. Comprehending the various components of retirement income and the factors influencing income needs helps couples create a more realistic and tailored financial strategy.

Understanding Average Retirement Income

Defining “average retirement income” requires distinguishing between statistical measures such as the mean and the median. The mean can be skewed higher by a small number of very wealthy retirees. The median, representing the middle value, often provides a more representative picture of what a typical retired couple earns.

According to the U.S. Census Bureau, the median income for married-couple family households aged 65 and over was approximately $75,819, with a mean income of $108,225 based on 2020 data. For individuals aged 65 and older, the U.S. Census Bureau reported a median income of $54,710 and a mean income of $83,950 in 2023. These national averages serve as benchmarks, but individual situations can vary considerably based on location, spending habits, and other personal factors.

Social Security benefits form a significant portion of retirement income for many couples. As of February 2024, the average monthly Social Security benefit for a retired worker was approximately $1,911. The average spousal benefit, which can be up to half of the working spouse’s full retirement age benefit, was about $912 per month in February 2024. Combined Social Security income for couples varies depending on whether both partners qualify for worker benefits or if one receives a spousal benefit.

Primary Sources of Retirement Income

A diverse set of income streams contributes to a couple’s financial security in retirement. Social Security benefits are foundational for most retirees, providing a consistent income based on their earnings history. Couples can coordinate their claiming strategies, with provisions for spousal and survivor benefits that can significantly impact total household income.

Traditional defined benefit pensions, though less common for newer workers, still provide a guaranteed income stream for some retirees. These plans promise a specific monthly payment, often for life, based on factors like years of service and salary. They represent a predictable source of funds that can help cover essential expenses.

Defined contribution plans, such as 401(k)s and 403(b)s, represent accumulated savings that retirees draw upon during their non-working years. These plans involve contributions made over a career, with investment growth compounding tax-deferred until withdrawal. The tax treatment of withdrawals depends on whether contributions were pre-tax or Roth, impacting the net income available in retirement.

Individual Retirement Accounts (IRAs), including Traditional and Roth IRAs, offer another avenue for personal savings. Traditional IRA contributions may be tax-deductible, with withdrawals taxed in retirement, while Roth IRA contributions are made with after-tax dollars, allowing for tax-free growth and qualified distributions. Both types of accounts provide flexibility in managing retirement assets.

Personal savings and investments held in non-retirement accounts, such as brokerage accounts or real estate, also contribute to a couple’s financial resources. These assets can be liquidated or generate income, offering additional flexibility. Other income sources may include part-time work, annuities, or rental income from properties, further diversifying a couple’s financial portfolio in retirement.

Factors Influencing Retirement Income Needs

A couple’s actual income needs in retirement can diverge significantly from national averages due to various influencing factors. Healthcare costs represent a substantial and often unpredictable variable. Expenses like Medicare premiums, deductibles, co-pays, prescription drugs, and potential long-term care can consume a considerable portion of retirement income.

Desired lifestyle and spending habits directly shape income requirements. A couple planning for frequent travel, expensive hobbies, or regular dining out will generally need a higher income than those anticipating a more modest, home-centric retirement. Discretionary spending plays a large role in determining the overall budget.

Geographic location also profoundly impacts the cost of living. Housing, utilities, transportation, and even groceries can vary substantially from one region to another, making retirement significantly more expensive in some areas compared to others. Moving to a lower cost-of-living area can reduce income needs.

Carrying debt into retirement, such as a mortgage, credit card balances, or other loans, necessitates a higher income to cover ongoing payments. Reducing or eliminating debt before retirement can free up significant cash flow for other expenses.

Inflation, the gradual increase in the cost of goods and services over time, erodes purchasing power. Retirees need to account for inflation to ensure their income maintains its value throughout their retirement years.

Taxation of different income sources in retirement also affects net income. Social Security benefits, pension payments, and withdrawals from pre-tax retirement accounts are often subject to income taxes, while qualified withdrawals from Roth accounts are typically tax-free. Understanding these tax implications is essential for accurate income planning.

Unforeseen expenses, such as home repairs or unexpected medical issues, necessitate maintaining a financial buffer. This buffer helps absorb financial shocks without disrupting regular income streams or depleting core savings.

Estimating Your Own Retirement Income

Estimating specific retirement income needs involves a detailed assessment of current and projected expenses. Couples should begin by thoroughly tracking their present spending to categorize essential costs, such as housing and utilities, and discretionary expenses, like entertainment and travel. This analysis provides a realistic baseline for future financial planning.

Project future expenses, adjusting for changes anticipated in retirement. While commuting costs and work-related expenses may decrease, healthcare costs are likely to increase, and new hobbies or travel plans could introduce different spending patterns. Accurately forecasting these shifts is crucial for a precise estimate.

Calculate expected income streams from various sources. Utilize tools provided by the Social Security Administration to estimate future benefits, and ascertain any potential pension income. For retirement savings held in accounts like 401(k)s and IRAs, consider sustainable withdrawal rates, typically ranging from 3% to 4% of the account balance annually, to project income without prematurely depleting assets.

Comparing projected income with projected expenses will reveal any potential “gap”—a shortfall or surplus between anticipated income and spending needs. Identifying this difference allows couples to make informed adjustments to their savings strategy or retirement timeline. To facilitate this complex process, utilize online retirement calculators, financial planning software, or consult with a qualified financial advisor. These resources can provide personalized projections and guidance to help ensure a financially secure retirement.