Average Social Security check
The average monthly Social Security benefit check in January 2025 was $1,976. In 2025, beneficiaries are eligible for a 2.5% cost-of-living adjustment.
Do retirees have enough income?
The median income for retirement-age Americans is lower than average expenditures for that group, suggesting a retirement savings gap looms for many.
Pew projects that 32.6 million retirement-age households will have an annual income below $75,000 and an average cash shortfall of $7,050 by 2040.
The National Council on Aging found that incomes for 45% of Americans 60 and older are insufficient to support basic needs, and 80% of households in that age group are financially struggling or in danger of financial insecurity.
Low- and middle-income workers -- particularly baby boomers -- are at risk of not being able to sustain a 70% income replacement rate, according to Vanguard. Millennials and Gen X are in better shape for retirement except for those in the 25th income percentile, per Vanguard.
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. Higher earners will commonly see a smaller percentage of replacement income from those monthly benefits, and variables such as filing age can raise or lower Social Security benefits.
Social Security faces financial challenges that could result in cuts and retirement income shortfalls.
Nearly 90% of Americans are concerned about Social Security funding, 79% think there’s a retirement crisis, and 55% worry they won’t be financially secure when they retire, according to a survey from the National Institute on Retirement Security.
How to boost retirement income
There are steps that can be taken to boost retirement income. These include:
- Saving and investing aggressively in an IRA, 401(k) plan, or even a taxable brokerage account.
- Investing in assets that continue to pay during retirement, such as dividend stocks, REITs, and bonds.
- Delaying filing for Social Security for a higher monthly benefit.
- Working part-time in retirement.
- Owning a business in retirement.
- Maintaining an income property in retirement.
- Monetizing one's home in retirement (such as renting out space in a retiree-occupied home).
The average retiree income will change with the cost of living. Diversification through investments and other income streams and savvy spending in retirement will be necessary to keep up with inflation.
Rapid inflation from 2021 to 2023 has made it harder to retire on a fixed income. As a result, the average retirement age may shift back or more Americans near the typical retirement age may opt for a phased retirement in which they work part time.
An estimate of how much savings is required to replace a comfortable level of income in retirement is essential. Err on the side of overestimating retirement spending because having access to more money later in life is preferable to having less.
