The age-old question: What is a good monthly retirement income for a couple?
Times have changed – and so has the answer to this question!
This blog post will help you navigate the current retirement income landscape and determine a course of action for your needs.
Retirement Income Needs as a Couple
How couples plan for retirement is determined by a number of factors.
You and your partner will need to think seriously about where you plan to retire, what sort of lifestyle you hope to lead, and how you can fund your retirement goals.
When gauging your retirement income goals as a couple, you’ll need to:
- Identify your expenses
- Understand average retirement income rates
- Explore avenues to potentially increase retirement income
- Plan ahead
To start, we’ll explore common retirement expenses.
Identifying Expenses
The cost of living in retirement varies on a number of factors. Some of the most common retirement expenses include:
- Cost of living (food, utilities, transportation, housing, etc.)
- Taxes (property, income, capital gains, etc.)
- Healthcare (appointments, prescriptions, surgeries, etc.)
- Travel (vacations, family events, end-of-life. etc.)
- Debts (credit cards, mortgages, loans, etc.)
- Inflation
- Emergencies
- Family and gifting
- Retirement goals
- End-of-life care
- Legal fees
- Financial planning costs
Many of these expenses are common, life-long financial considerations. If you are planning for retirement, there’s a chance you’ve already got an idea of your major expenses. This can help you when sitting down to plan for retirement.
Next, we’ll look at some considerations for couples as they plan their retirement income.
Average retirement Income for Couples
According to the 2020 Census, the yearly average retirement income for couples is less than $101,500.
However, it’s important to note that the average income and median income are different. Median retirement income for a couple is lower – at only $72,800. That means more than half of retirees make less than $73,000 annually from their retirement income.
It’s important to know how your retirement income compares – and where it’s coming from – so you can plan to live accordingly.
Common Sources of Retirement Income
Below are some of the most common sources of retirement income. Consider which options make sense for you as you plan for retirement:
Social Security
For retired couples who are both receiving benefits, the average monthly income from Social Security is now $2,753.
Savings
Common advice for couples is to have about 7.5x their yearly income saved for retirement. Unfortunately, a recent Vanguard study estimates that most couples aged 65 and over only have an average of $255,151 in retirement savings.
Pensions
Although pensions are becoming less common in American workplaces, retirees or those approaching retirement may have this benefit through an employer.
Retirement Accounts, Annuities, and Investments
Depending on how much you’ve prepared, you may have retirement accounts that can supplement your retirement income. This could be a 401K, Roth IRA, annuities, or other investments.
Working/Side Hustles
Retirees can use side hustles as a way to supplement their income, stay engaged, and pursue activities they enjoy. Here are some ideas and tips for retirees considering side hustles:
- Flexible Part-Time Work
- Freelancing and Consulting
- Rent Out Property
- Online Selling
- Driving and Delivery Services
- Pet Sitting or Dog Walking
- Teaching and Tutoring
- Remote Work
- Seasonal Work
- Share Your Knowledge Online
- Photography or Videography
How to Plan Ahead
Planning ahead for retirement is crucial to ensure financial security and a comfortable lifestyle during your post-work years.
Here are some steps to help you create a solid retirement plan:
Set Retirement Goals
Determine when you want to retire and what kind of lifestyle you envision for yourself during retirement. Consider factors like travel, hobbies, healthcare, and any other specific expenses you might have.
Assess Current Finances
Take a close look at your current financial situation, including your savings, investments, debts, and sources of income. Understanding your current position will help you set realistic retirement goals.
Create a Budget
Estimate the amount of money you will need annually during retirement. Consider factors such as inflation, healthcare costs, and potential changes in lifestyle, then use this information to develop a budget that balances your current needs with your future retirement needs. This will help you identify areas where you can save more money to contribute to your retirement fund.
Contribute to Retirement Accounts
Take advantage of retirement savings accounts such as 401(k)s, IRAs, or Roth IRAs. Contribute as much as you can, especially if your employer offers a matching contribution. Spread your investments across different asset classes (e.g., stocks, bonds, real estate) to reduce risk and potentially increase returns.
Pay Off Debts
Prioritize paying off high-interest debts like credit cards and personal loans. Being debt-free in retirement will free up more funds for your living expenses.
Plan for Taxes
Understand the tax implications of your retirement accounts and investments. Some accounts offer tax advantages, while others may have taxable consequences.
Emergency Fund
Have an emergency fund to cover unexpected expenses, so you don’t need to dip into your retirement savings prematurely.
Consider Healthcare Costs
Research healthcare options for retirees. Medicare in the United States typically starts at age 65, but you may need additional coverage for certain expenses.
Long-term care insurance can help protect your assets from the high costs of extended healthcare services in the future.
Plan for Social Security
Understand how Social Security benefits work and when is the best time to start claiming them. Delaying the claim can increase your monthly benefit.
Review and Adjust Regularly
Review your retirement plan periodically and make adjustments as needed, especially as you get closer to retirement age or if there are significant life changes.
Remember that planning for retirement is an ongoing process. The earlier you start, the more time your investments have to grow and the more prepared you’ll be for a financially secure retirement.
FAQs
What is the average income of a retired couple?
According to the 2020 Census, the average retirement income for couples is less than $101,500.
What is a good retirement income for a couple?
A good retirement income is subjective. The median retirement income is currently $72,800 annually. Your lifestyle, retirement goals, and ability to find alternative sources of income can all affect your idea of a “good” retirement income.
How much does the average retiree live on?
$72,800 or less annually.
This report was prepared by Oxford Wealth Group, LLC, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Form ADV Part 2A & 2B can be obtained by visiting https://adviserinfo.sec.gov and search for our firm name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.This is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person who may receive this report.
