Average Retirement Income by Age & Increasing Your Retirement Income
Do you know what the average retirement income is by age? Do you wonder how you can increase your retirement income? That is exactly what I want to talk about in this video blog. How can you increase your retirement income and how do you know where you stand with the average retirement income by age and generation. Now just for clarification, instead of using average retirement income numbers, I am going to use median retirement income numbers. Averages don’t give us an accurate view of actual retirement income but skews the retirement income figures to the high end. Medians give us a very accurate retirement income picture so that you can compare your retirement income calculations to other ages and generations.
First off, let’s get into the retirement income numbers.
Below is a chart of the average retirement income broken down by age and generation.
Age 55-59 $73,711
Age 60-64 $64,846
Age 65-69 $53,951
Age 70-74 $50,840
Age 75+. $34,925
Single 65+ $24,244
What is the first thing you notice when looking at the average retirement income? I noticed that the younger you retire, the more retirement income you are going to need. As we age, the retirement income that we need drops dramatically. I couldn’t find definitive reasons for this retirement income drop, but what I can say from my practice is that most of my clients who are older just don’t need the extra retirement income. The only situation where older clients need more money in retirement is when a healthcare situation arises.
This is why you need a retirement income plan. You need a retirement income plan that spans when you first retire at 55 until you are 100 years old. That’s almost 50 years of retirement income! Why do you need a 50 year retirement income plan? Because you are more likely than not, barring any kind of tragedy, going to live into your late 80’s and early 90’s.
How much retirement income should you plan for? At least 70%-80% of your pre-retirement income. A good retirement income calculator would be taking your current income and multiplying that by 70% or 80% (For example: $100,000 X .70= $70,000). That retirement calculation will help you determine how much retirement income you need to plan for coming out of your retirement income streams.
What are the retirement income streams: Social Security, pensions, dividend stocks, annuity payments, IRA & Roth IRA withdrawals, required minimum distributions, rental income, passive income, and any other retirement income stream you expect to receive in retirement.
How do you create a retirement income plan? Take all your retirement income streams mentioned earlier, put them on a piece of paper or excel spreadsheet in one column. Next take all your expenses you will have in retirement and put those in the next column. Make sure to include taxes, vacations, and expected one time expenses. Add these two figures up and then subtract income from expenses. If you have a positive retirement income number then you are on the right track towards retirement. If it is negative, then you have some work to do in your retirement income planning.
How can you increase your retirement income? Great question!
Here are three simple ways to increase your retirement income.
1. Maximize your retirement accounts and retirement savings
2. Delay Social Security Payments
3. Work Longer or Work Part Time
I hope this article has helped you on your retirement journey. Please leave your comments or retirement income questions below. Thank you so much for reading and watching!
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