This Is the Average American’s Retirement Income. How Do You Compare?

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The average and median levels of retirement income vary widely. Here’s a look at the data. 

There are all kinds of ways to fund your retirement. Some folks have retirement accounts, others have investment portfolios. Still others — a distressing number, as it turns out — are living almost entirely off the Social Security payments they get each month.

Regardless of where it comes from, it’s absolutely vital to have a reliable income during retirement. But how much is enough?

The actual figure you need to earn in retirement will depend entirely on your specific needs (and wants). That said, many folks like to see how they stack up against other people in their peer groups. So, here’s a look at some of the data on retirement income from the 2022 Current Population Survey Annual Social and Economic Supplement (CPS ASEC).

Average annual income: $75,254

The most common way folks look at numerical data is the average. According to the CPS ASEC data, the average income for retired households in the U.S. is $75,254.

Before you worry that you’re way behind the curve, it’s important to remember exactly what the “average” means. If you took the total amount of income for everyone who is retired, and divided that huge number by the total number of retired people, you get the average income per retired person.

Now, if you have a small number of retired people making a huge amount of money, that can make the average much higher. This can inflate the numbers enough that it’s not necessarily a good measure of the real situation. For that, you need the median.

Median annual income: $47,620

As you might guess from the name, the median income is the one in the middle. Think of it this way: If you made one long list of the incomes of every retired person in the U.S., in numerical order, the median income would be the number exactly halfway down the list.

Why is this better than looking at the average? Because it’s far more accurate. Half of retired people make more than the median, and half of them make less than the median. (With averages, you could have a small number of people making more than the average, and a large number of people making less.)

The median income for retired households in the U.S. is $47,620. So, if you’re making somewhere around that amount, you’re in the middle of the pack.

Average Social Security check: $1,827 a month

If you’re not yet retired, then there’s something very important to understand about these numbers: They look at far more than Social Security income. The average Social Security payment is just $1,827 per month in 2023 — that’s less than $22,000 a year.

So, for the folks around the median income level, Social Security makes up less than half of their retirement income. The rest will be things like pensions, retirement accounts, and other investments.

Given the constant peril that the Social Security fund finds itself in, expecting Social Security to make up even half your income in retirement is asking for trouble. And trying to live entirely on Social Security is a serious challenge, especially as prices keep going up. So, if you’re not already retired, my advice is to start — or keep — saving.

How to supplement retirement income

The most common way people supplement their Social Security in retirement is with a retirement fund, such as an IRA or 401(k) account. While investment accounts can carry some risk — investing in the stock market never guarantees a return — long-term investing tends to result in a net positive gain.

If stocks aren’t of interest (or you’re looking to diversify after maxing out your retirement accounts), consider other types of investments. Some popular avenues include investing in real estate and investing in small businesses.

A handful of folks may still be in careers eligible for pensions (typically government jobs). If that’s you, make sure you look into how to qualify for a pension and complete any necessary enrollment steps.

Your only real competition is time

Although it’s human nature to compare ourselves to others, be sure you’re not judging yourself too harshly based on faceless numbers like those in this article. At the end of the day, if your retirement income is enough to give you a comfortable life, that’s all that matters.

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