Where will your retirement income 2017 come from?
There is some good news though. According to Fidelity’s most recent retirement readiness survey, “people are saving more and investing more appropriately for their age, improving the overall state of retirement readiness of households in America. As a result of this positive behavior, the number of people who are likely to afford at least their essential expenses in retirement jumped seven percentage points since 2013, from 38 to 45 percent.”
“However, this means more than half (55 percent) are estimated to be at risk of being unprepared to completely cover essential living expenses in retirement, which includes housing, health care and food.”
How Are You Doing Compared to the Average Income in Your Zip Code?
Before looking at national average retirement income 2017, you might want to first consider how your income stacks up against others in your own zip code. Afterall, some places are just a lot more expensive than others. Whether or not your own retirement income is adequate partly depends on where you live.
You can get a quick and easy comparison by using the NewRetirement Retirement Calculator. In addition to being one of the most comprehensive and useful retirement calculators — really more like a virtual financial advisor — the tool can instantly tell you how your retirement income, expenses, assets, debt and net worth compare to other people in your own zip code.
What is Average? Median and Mean?
When talking about average income, it is important to go back to middle school math and remember about the differences between medians and averages.
- Average income — often referred to as “mean income” — is computed by adding up each household’s income and then dividing by the number of of households. This number can be deceiving. It can make “average” incomes seem high because few people earn tremendous amounts of money. These high earners can skew the data.
- Median income is determined by organizing all individual’s income in order from low to high and the median income is the income in the exact middle of the list with half of the incomes being higher and half lower. Many statisticians think that median income is a more representative number.
What is the Average Retirement Income 2017 (Mean)? What is the Median Retirement Income 2017?
As you can see in the table below, median income is always lower and is probably closer to the reality for most households of retirement age.
You may have also noticed that average retirement income 2017 varies significantly by the age of the head of household. Household incomes decline the older they become.
|Age of Household||Median Income||Mean Income|
|Households Aged 55-64||$62,802||$89,986|
|Households Aged 65-74:||$47,432||$68,905|
|Households Aged 75 and Older:||$30,635||$45,989|
SOURCE: Data is summarized from the US Census Bureau’s Current Population Survey (CPS) Annual Social and Economic (ASEC) Supplement. The CPS is a joint effort between the Bureau of Labor Statistics and the Census Bureau.
Where Does Most Retirement Income Come From?
According to the Pension Rights Center, older adults get retirement income from the following sources:
- Social Security: 85 percent of people 65 and older get Social Security. The average Social Security income in 2017 will be $1,360, according to a fact sheet from the Social Security Administration.
- Assets: Sixty-three percent of retirees rely on assets for retirement income. According to Retirement USA, “the median amount of asset income for households where either the householder or spouse was aged 65 or older was $1,542 for those households who received any asset income. In 2008 59 percent of older households had income from assets.”
- Pensions: A mere 32 percent of today’s retirees have pensions and this number is trending further downward.
- Earnings: 23 percent of older Americans have work income. According to the AARP, the median retirement income earned by retirees from work is $25,000 a year. Note, this is the highest amount of any income source.
- Public Assistance or Veteran’s Benefits: About 7 percent of retirees are getting help from government sources.
As you can see, retirees today are more dependent than ever before on Social Security income. One of the biggest problems with that approach, aside from the fact that the program isn’t incredibly stable, is that Social Security was never intended to be a primary source of income. It was intended as a boost.
So, How Are People Making Ends Meet with Average Retirement Income?
Most retirees collect Social Security and make up the difference for excess expenses by withdrawing funds from savings — if they are lucky enough to have savings.
A better idea is to have a specific spending and income plan for your retirement. Most of us are not very good at budgeting. And living month to month works okay when you are working, but having a clear budget and a solid plan is more important when you are retired.
By definition, your resources are more limited when you retire.
How Can You Boost Your Average Retirement Income Before Retirement?
So maybe you’ve examined your financial plan and found that it needs a little improvement. There are ways to manage that at any stage of the game.
If you’re still very young, adjusting will be easier. Max out your 401(k) contributions or start an IRA, and keep up the contributions, and you’ll have a tidy sum when you retire.
If you’re midway through your working years, it’s a little tougher. Look for ways to cut back so that you can save more. And if you’re 50 or older, you get a boost. Catch-up contributions for 401(k) and IRA plans raise your max contributions by $6,000 annually in 2017, according to the IRS.
Retired or Almost Retired? Use These Tips to Boost Your Retirement Income
If you’re on retirement’s threshold or in retirement already, you can still improve your financial situation and get more retirement income.
Here are 6 of the best ways to boost your retirement security and get beyond average retirement income 2017:
1. Postpone retirement:
- If you haven’t retired yet, postpone your retirement date and use the time working to save more money to use as income later.
2. Postpone the start of Social Security:
- Postpone collecting Social Security until at least full retirement age, or longer to get the maximum retirement income 2017 (and beyond). Delaying the start of Social Security can mean a BIG boost to your overall retirement wealth. (If you wait to start benefits, you might earn an additional $300 a month — or more.
- If you calculate that additional benefit over a 30 year time period ($300 multiplied by 30 years) then waiting would mean $90,000 in additional retirement income.
- Use this Social Security Calculator to figure out the best time for you to start your benefits.
3. Get a retirement job:
- You don’t have to work full time, and any income will supplement your Social Security benefits.
4. Postpone withdrawal of savings and maximize investments:
- By working longer, you can delay the need to withdraw savings. left untouched, your savings in the bank can grow and become worth more — assuming you have optimized your investments.
5. Tap your home equity:
- For most retirees, their home is their most valuable asset. There are many ways that you can tap into your home equity to help maximize your wealth, add to your retirement income or make other assets last longer. Reverse mortgages are an increasingly popular option. Downsizing is another possibility.
6. Budget and stick to it:
- Retirement security is not dependent on huge savings accounts and big incomes. You can be secure in retirement even at a very low-income level — so long as your expenses are low too. Downsizing and living frugally can give you a secure retirement at any income level.
7. Know what you have and what you need
Do you know how much retirement income you will have throughout retirement? Do you know how that compares to the average retirement income 2017? The NewRetirement retirement calculator isn’t a magic 8-ball (although it very well seems like one) but it can give you very personalized and detailed answers and forecasts for your retirement.
It also enables you to try out any of the strategies listed above. See what happens to your future retirement security if you add income from a retirement job, delay Social Security or tap into home equity. This calculator makes retirement planning fun and easy.