Money is often what separates a comfortable retirement from a stressful one. When you're rolling in savings and can comfortably afford to pay for all your expenses, you're free to focus on doing what fulfills you.
When you're heavily reliant on Social Security and only have a small amount of savings, it's usually more difficult to find joy in retirement. Unfortunately, due to high living costs, it's easier to fall into this camp than you might imagine. Here's a closer look at how much the average retiree actually lives on.
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What retirement income looks like for the average retiree
The average income for American adults aged 65 and older is $87,260, according to 2024 data from the U.S. Census Bureau. But the median income for this group is just $56,680. For our purposes, we'll look at median income because it better represents the typical retiree experience. Averages are more easily skewed by a few high earners.
A $56,680 median annual income comes out to $4,723 per month. This isn't a lot to live on, especially if you live in some of the worst states for retirement.
The average Social Security retirement benefit is around $2,071 per month. If we subtract this from $4,723, that leaves the typical retiree with $2,652 per month coming from other sources, like personal savings or a job.
It's worth noting that many living off this income aren't especially comfortable. The average annual expenditures for households 65 and older are $61,432, according to the Bureau of Labor Statistics.
That puts many in the difficult position of spending more than they earn each year. This can lead to debt or increased financial strain on family members who support them.
What to do if you're struggling to save for retirement
Regular retirement contributions of at least 10% to 15% of your annual income are ideal, but this isn't feasible for everyone. You might only be able to make sporadic contributions. Or you might have to settle for a lower contribution rate. Just do what you can.
If you qualify for a 401(k) match, try to claim this every year. This can rapidly increase your retirement savings compared to going it alone. If you get a raise, try to increase your retirement contributions first.
When all else fails, see if you can remain in the workforce a little longer. It might not be what you want, but a steady paycheck can reduce the burden on your personal savings. You'll be able to leave them invested for longer so they can cover more of your expenses in the future.
