Average Retirement Income 2021: How Do You Compare?

Average Retirement Income 2021: How Do You Compare?

How are you going to pay for retirement? How is everyone else doing it? What is the average retirement income for 2021? Has it changed a lot from past years with the pandemic? Are you anywhere close to average?

2020 was a devastating year for the finances of many households. And surprisingly, it was also ended up being lucrative for others. Where do you stand now and how does that impact your future retirement?

Figuring out if you are going to have a secure future can be difficult. There are a lot of questions to answer and some things can be estimated by comparing yourself to averages.

However, there is no way YOU are average. When reviewing the numbers below, remember that your retirement security is based on hundreds of different factors. The best way to plan and feel good about your future is by creating a detailed retirement plan. The NewRetirement Planner will give you reliable projections — unique to you. And, it will help you find a path to more confidence about your finances, plus more wealth and security.

Average Retirement Income and the Risk of Running Out of Money

The Boston College Center for Retirement Research publishes the National Retirement Risk Index (NRRI). It measures the share of American households that are at risk of being unable to maintain their pre-retirement standard of living in retirement. The index is updated each year.

According to their most recent analysis, the percentage of retirees in 2021 who are at risk of not having enough is about 50%.

The most recent analysis uses data from 2019, but because the economy has changed dramatically over the last year, the researchers have attempted to determine the impacts of job losses and also growth in the financial and housing markets.

Their conclusion? “The bottom line is that half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65 and annuitize all their financial assets, including the receipts from a reverse mortgage on their homes.”

Jump down to see average retirement income numbers for 2021. Or, use the NewRetirement Planner to calculate your own retirement income, assess if it is enough, and learn about moves to make now so you can feel great about your financial future.

Differences Between Mean and Median

The numbers you will review below represent both mean (average) and median income. Median is always lower and is closer to the reality for most households of retirement age.

Here are the differences:

Mean: Mean or average income is calculated by totaling each household’s income and then dividing by the number of households. This number can be very deceiving. Households earning the highest amounts of money will skew the data and make “average” incomes seem high.

In fact, mean (average) is even less meaningful in 2021 than ever before. Wealthy households have largely gotten wealthier over the last year. And poor households have largely gotten poorer as many of the lowest-earning households went from low wages to no job or income at all.

Median: Median income is determined by organizing all income in order from low to high. The median income is the income in the exact middle of the list with half of the incomes being higher and half being lower. Many statisticians think that median income is a more representative number.

Median is probably more representative now with increasingly divergent income levels.

What is the Average (and Median) Retirement Income for 2021?

Reporting on average retirement income can be tricky. The best income data does not include information about whether someone is officially “retired” or not. Retirement has no official definition — with many “retirees” still working. Retirement is more of a mindset these days. However, for these purposes, we’ll start with statistics for those over 65.

The average retirement income numbers for Americans over 65 seen below comes from the US Census Bureau. The most recent data available is from 2019 and compiled in 2020. So, all of the economic changes we have seen over the last year are not necessarily represented in the data below. However, the following numbers should be very close to reality for the average household

Average Household Retirement Income 2021:

  • Median Income — $56,632 (up from $43,696 in 2016)
  • Mean Income — $84,153 (up from $67,238 in 2016)

Average Retirement Income 2021 by Household Age — Incomes Drop Dramatically for the Oldest Surveyed

Both the mean and median retirement income numbers above might seem “above average” — relatively healthy. However, these numbers don’t tell the whole story. Nor do they reflect the “retirement crisis” that is so often reported.

And, there is a reason. Those numbers don’t show the reality of all retirees — especially those who are older.

You see, for most people, retirement income falls dramatically as you age. The median household income for households older than 75 is more than half the household income for households ages 60–64!

Compare the median income by age range:

Age of Household Median Income Mean Income 
Households Aged 45–49$93,393$127,519
Households Aged 50–54$91,214$124,156
Households Aged 55–59$81,512$118,061
Households Aged 60–64$70,031 $100,842
Households Aged 65–69$60,324 $88,291
Households Aged 70–74$53,327 $79,344
Households Aged 75 and Older: $37,335$58,644

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.

Much Worse Retirement Income for Single Households

Declining average retirement income as people age is not the worst of it!

The averages are more distressing for people who are single. The Pension Rights Center reports that “Half of all Americans age 65 or older have incomes of less than around $25,000 a year — far less than the amount that most need to meet their day-to-day living and health care expenses.”

The Census Data shows this for non-family (single) households:

Age of Household Median Income Mean Income 
Households Aged 65-69$32,031$49,265
Households Aged 70-74$30,205 $45,478
Households Aged 75 and Older: $24,147$36,491

Do Nationwide Averages Matter? What is the Average Retirement Income in YOUR Zip Code?

Age matters when it comes to assessing average retirement income. Where you live is another big factor.

The national retirement income averages might be interesting, but not useful to you. After all, there are huge differences in the costs of living and income across different cities and regions in the United States.

It is more relevant to consider how your income stacks up against others in your own zip code (or in a zip code where you might relocate for retirement).

Where Does Most Retirement Income Come From… And How Can You Boost Yours?

What follows are the top 4 sources of retirement income for most retirees and how to boost your income from each of them.

1. Average Social Security Income for 2021:

More than 85% of people 65 and older get Social Security. Among elderly Social Security beneficiaries, 50% of married couples and 71% of unmarried persons receive 50% or more of their income from Social Security.

No Big COLA Boost for 2021

The average monthly Social Security income only got a 1.3% boost for 2021 due to low inflation. This Cost of Living Adjustment (COLA) raised the average monthly Social Security payment by only $20 to $1,543.

Social Security was never intended to be a primary source of income. It was only ever intended to supplement retirement income. However, maximizing your payout can really add up over your lifetime!

How to Increase Your Social Security Income

What is the best way to get more Social Security income? Postpone collecting your benefits until at least full retirement age or longer (age 70) to get the maximum monthly payment. Delaying the start of Social Security can mean a BIG boost to your overall retirement wealth.

And, more and more retirees are getting the message. It used to be that the most popular age to start benefits was 62. However, now the most popular age for men to start benefits is 66 with 36% starting benefits at that age, followed closely by age 62 with 27% starting at this early age. The most popular age for women to start is a tie. Thirty-one percent of women start at 62 and another 31% start at 66.

Plan for Your Spouse’s Income, Not Just Your Own: If you are married, it is especially important that the higher earning spouse defers the start of benefits for as long as possible. As you saw above, retirement income for people living on their own is extremely low.

You can help mitigate that problem with the right claiming strategy. Learn more about smart strategies for Social Security if you are married.

2. Average Retirement Income from Assets for 2021

According to the most recent Transamerica Retirement Survey, 39% of baby boomers expect their primary source of retirement income to come from retirement accounts such as 401(k)s, 403(b)s, and IRAs or other savings.”

And, the Pension Rights Center reports similar estimates. However, they have found that most older adults have little in savings. Only 66 percent receive income from financial assets. Half of those receive less than $1,754 a year.

Most people don’t have enough assets to meet their needs. The estimated median for baby boomer’s total retirement savings is inadequate to provide the income needed. Transamerica reports that baby boomers have saved a median of only $164,000.

How Much Retirement Income Do Average Savings Produce?

If you were to use a common (though flawed) rule of thumb to withdraw 4 percent each year — adjusting for inflation as you go along — then $164,000 would only produce about $6,560 in retirement income in your first year of retirement. This is not enough for most households.

How to Boost Your Income from Savings

This is easy… save more! Okay, maybe not so easy.

  • If you are young, max out your 401(k) contributions and start an IRA. 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. Be careful about what you spend on family in this phase of your life. Try to focus on making catch-up contributions.
  • Retired or Almost Retired? Perhaps the best way to boost your retirement income from savings is to actually spend less or work longer! Your savings will last a lot longer if you are spending less (here are 20 ways to cut retirement costs).

You may also want to explore the best way for you to turn your savings into retirement income. Or, explore using a bucket strategy. It maximizes the growth of some of your assets while minimizing risk on others.

Working with a financial advisor to identify opportunities to efficiently turn assets into income can be another good opportunity for you. NewRetirement Advisors is a new, cost-effective, and comfortable way to work with a Certified Financial Planner.

Or, model different scenarios using the NewRetirement Planner to find a set of inputs and opportunities that give you a secure future.

3. Average Retirement Income from Pensions

The Pension Rights Center reports that one out of three older adults have retirement income from a pension. This number is trending further downward. Consider yourself extremely lucky if you have this income!

Very lucky in fact: Older adults who have pensions typically have at least twice the income of those living only on Social Security

The median annual pension benefit ranges between $9,262 for private pensions to $22,172 for a state or local pension, and $30,061 for a federal government pension and $24,592 for a railroad pension.

How to Boost Your Pension Income:

You cannot exactly boost your pension payments. You can make sure that you are making the right choice between getting monthly payments vs a lump sum. Additionally, you should periodically check with your plan administrator about the health of the funds. Many pensions are underfunded.

If you are lucky enough to have a pension, be sure to use a retirement calculator with pension controls to accurately factor your pension into your overall plan! The NewRetirement Planner fits the bill!

4. Average Retirement Income from Work:

Work after retirement is becoming an important part of retirement income.

According to the Bureau of Labor Statistics:

  • Among 65–74-year-olds, labor force participation is predicted to hit 32% by 2022, up from 20% in 2002.
  • At age 75 and up, the rate will jump from 5 percent in 2002 to 11% in 2022.

And, other studies predict work after retirement age to be even more common. Transamerica estimates that 55% of all baby boomers plan to or already are working past age 65 or do not plan to retire.

And, 81% of those boomers cite financial reasons — the need for retirement income — for continuing to work.

How to Boost Retirement Work Income: Delaying your retirement is the first option you might want to look at. Or, if you don’t already have a retirement job, you should consider one.

It doesn’t need to be a 9–5. It does not need to be high stress. In fact, you should look for work that you really enjoy doing and let the income be a bonus.

Any work income is going to be tremendously beneficial — both financially and for your intellectual and social well-being as well. Explore the benefits of work after retirement and the best jobs for retirees. Also, have you considered passive income sources?

Use the NewRetirement Planner to see how work income impacts your long term financial health. Try different scenarios with different levels of work income over varying time periods to discover your optimal plan.

Average retirement income in 2021 is somewhat driven by choices retirees made long ago — where did they work, how much did they save, did they buy a home, and more. However, retirement income is also driven by decisions retirees make today and trends driving the overall economy.

Here are some financial trends that may impact your retirement income:


There is not just one way to create adequate retirement income. Especially now, what with the proliferation of tools and financial education available due to the Internet. There are many ways to create retirement income that have now been unlocked.

Explore 18 different retirement income strategies.

Decumulation Is a Separate Expertise from Accumulation

Traditionally the concept of retirement planning has focused on saving. However, in retirement you need to know how to spend your savings — this is often referred to as decumulation.

With baby boomers retiring in record numbers, companies are refocusing efforts on helping retirees know how to turn their assets into income. If you are working with a financial advisor, make sure they have a focus on retirement — not just on accumulating assets, as many do.

The NewRetirement Planner has new functionality that helps you model savings withdrawals in different ways. You can also try out an annuity, reducing spending, and literally hundreds of different opportunities for achieving adequate retirement income!

Social Security and Medicare Solvency

Social Security and Medicare are in real financial trouble. Policy changes will likely change the future of these programs. Nothing is certain, but if you dive into the numbers, you can see that there are very real concerns about the future of these programs that provide the lion’s share of retirement income.

While, if you are of retirement age now, your benefits are probably not in peril, future claimants may face reduced benefits.

Pension Plan Solvency

Like Social Security and Medicare, many pension plans are underfunded. If you are lucky enough to have a pension, it may be worthwhile to investigate your plan’s solvency.

Continued Low Interest Rates

Interest rates are still at historic lows. This is good news if you are carrying debt.

However, it is bad news if you are trying to get guaranteed returns on savings.

Steady Growth in Stock Market Returns

After a 10+ year sustained bull market, the market is still marching upward.

However, retired investors could face difficulties if a market correction occurs.

As such, there may be an increased demand for investments that offer less risk or downside protection like bonds, lifetime annuities, real asset funds and more…

Increased Interest in Deferred Lifetime Annuities:

According to LIMRA, deferred lifetime annuities (also known as longevity annuities) are growing in popularity. A deferred lifetime annuity is an insurance product that guarantees a monthly paycheck to start at a future date you determine. See what kind of future income you could afford by using the lifetime annuity calculator.

Annuities can also be a part of a Lockbox Strategy, a retirement income methodology developed by Nobel Laureate William Sharpe.

Healthy Real Estate Market

You might not immediately think of your home as having an impact on your retirement income. However, your home is most likely your most valuable financial asset and there are various ways to turn your equity into retirement income.

That is why it comes as bad news that home prices may be plateauing.

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.

You can model future housing changes as part of your long term financial plan in the NewRetirement Planner.

Retirement Income for 2021 is Only Part of the Equation

Knowing about average retirement income for 2021 is interesting and one way to benchmark your financial health.

However, knowing your own projected retirement income from now throughout retirement and also calculating your future spending is the key to a secure retirement.

The NewRetirement Retirement Planner 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 income and spending.

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