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Generally speaking, a good monthly retirement income is 80% of pre-retirement income; advisors frequently recommend a range between a more conservative 90% and a percentage of 70%. According to the U.S. Census Bureau, the median income for households headed by an individual over 65 in 2022 was $50,290, or $4,191 per month. S. Census BureauU. S. Census Bureau . Income in the United States. Accessed Sep 20, 2023. View all sources.
It’s likely that a lot of people are keen to optimize their monthly retirement income. According to the U. S. According to data from the Bureau of Labor Statistics, in 2021, consumers aged 65 and above spent an average of $57,818 a year, or $4,818 a month, more than the median income for households aged 65 and above. S. Bureau of Labor Statistics . Consumer Expenditure Survey. Accessed Sep 20, 2023. View all sources.
Here are a few well-liked sources of reliable monthly retirement income along with strategies for boosting it.
Retirement is a time to relax and enjoy the fruits of your labor. But to do that, you need to have a decent retirement income. So, what is a decent retirement income?
According to a recent study by the Employee Benefit Research Institute, retirees should aim for an annual income that replaces 70% to 80% of their average earnings from ages 45 to 64. Social Security will currently replace about 40% of the average earner’s pre-retirement income. So, if you want to maintain your standard of living in retirement, you’ll need to save additional money.
The amount of money you need to save for retirement will depend on a number of factors, including your desired lifestyle in retirement, your life expectancy, and your investment returns. However, a good rule of thumb is to save at least 10% of your income each year.
There are a number of ways to save for retirement. You can contribute to a 401(k) or IRA, or you can invest in other assets, such as stocks, bonds, or real estate. The important thing is to start saving early and to save as much as you can afford.
If you’re not sure how much you need to save for retirement, there are a number of online calculators that can help you estimate your needs. You can also talk to a financial advisor to get personalized advice.
How to increase your retirement income
There are a number of things you can do to increase your retirement income. Here are a few tips:
- Start saving early. The earlier you start saving, the more time your money has to grow.
- Save as much as you can afford. Even if you can only save a small amount each month, it will add up over time.
- Invest your money wisely. There are a number of different investment options available, so do your research and choose the ones that are right for you.
- Consider working part-time in retirement. This can help you supplement your retirement income and stay active.
- Downsize your home. If you have a large home, consider downsizing to a smaller one. This can free up some money that you can use to supplement your retirement income.
- Sell your car. If you don’t need a car, consider selling it and using public transportation or ride-sharing services. This can save you a lot of money on car payments, insurance, and gas.
- Get rid of debt. If you have any debt, try to pay it off as soon as possible. This will free up more money that you can use to save for retirement.
Retirement is a time to enjoy your life. By planning ahead and saving early, you can ensure that you have a decent retirement income. With a little planning, you can retire comfortably and enjoy your golden years.
Frequently Asked Questions
What is a good monthly retirement income?
A good monthly retirement income is typically 80% of pre-retirement income; advisors often suggest a range between 70% and a more conservative 90%. Median income for households headed by someone over 65 was $50,290, or $4,191 per month, in 2022 according to the U.S. Census Bureau[0]U.S. Census Bureau. Income in the United States. Accessed Sep 20, 2023.View all sources.
How much do I need to save for retirement?
The amount of money you need to save for retirement will depend on a number of factors, including your desired lifestyle in retirement, your life expectancy, and your investment returns. However, a good rule of thumb is to save at least 10% of your income each year.
How can I increase my retirement income?
There are a number of things you can do to increase your retirement income. Here are a few tips:
- Start saving early.
- Save as much as you can afford.
- Invest your money wisely.
- Consider working part-time in retirement.
- Downsize your home.
- Sell your car.
- Get rid of debt.
Additional Resources
- Social Security Administration
- Internal Revenue Service
- Employee Benefit Research Institute
- NerdWallet
Disclaimer
The information provided in this article is for general informational purposes only and should not be considered as financial advice. It is essential to consult with a qualified financial advisor to discuss your specific financial situation and goals.
Pensions
Employers like the federal government and the military may offer pension plans, though they are less common these days. Pensions are typically defined benefit plans, in which your retirement benefit is determined by your years of service and cumulative earnings.
Generally speaking, monthly retirement income from a pension fund cannot exceed either $475,000 (the 202024% threshold) or 20100% of your average compensation for the three most recent years of your life, whichever is less. The payments are subject to cost-of-living adjustmentsInternal Revenue Service . COLA increases for dollar limitations on benefits and contributions. Accessed Dec 5, 2023. View all sources.
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Ways to increase your monthly retirement income
Make sure to look into the retirement plans your employer offers if you’re still employed. Certain companies will match the contributions you make to a 401(k) plan.
- To get the most out of that arrangement and maximize the amount of free money you can get, fund your 401(k) at least as much as what’s needed to capture matching contributions, which are usually between 3% and 6% of your yearly salary.
- Employer-matching plans differ, but usually range from 2050 percent to 10000 percent of your contributions, up to that maximum.
- The Internal Revenue Service states that the maximum 401(k) contribution amount for individuals under 50 is $22,500 in 2023 and $23,000 in 2024; for those over 50, the maximum is $30,000 in 2023 and $30,500 in 2024. The 2024 401(k) cap is $23,000, and the IRA cap is $7,000 Accessed Dec 5, 2023. View all sources.