What Is the Median Retirement Income in the United States?

What is the median retirement income in the United States?

The numbers are sobering.

For households age 65 and older, the number is around $56,000 per year.

For individuals, it is around $47,000 per year.

That tells you one thing right away.

Lifetime income matters.

Key Takeaways

• Median retirement income can be lower than many people expect
• Social Security is the primary income source for many retirees
• Social Security was not designed to be your only retirement income
• Lifetime income annuities can help build an income floor
• Inflation cannot be perfectly solved by any commercial annuity
• The focus should be on creating enough guaranteed income to live your life

Why These Numbers Matter

Retirement is supposed to be chapter two.

But for a lot of people, the income numbers are tight.

Social Security is the best inflation annuity on the planet, but it was not designed to be the only retirement income source.

Unfortunately, for many people, that is exactly what it has become.

Start With Your Income Floor

The real question is not just:

“What is the median?”

The real question is:

What income floor do you need?

Your income floor is the money coming in every month to cover your life.

That can include:

• Social Security
• Pension income
• Required Minimum Distributions
• Rental income
• Lifetime income annuities

Why Pensions Are Rare Now

A long time ago, more people had defined benefit plans.

That means pensions.

Now most people have defined contribution plans like:

• 401(k)s
• 403(b)s
• 457 plans

Those are accumulation plans.

At retirement, you may have to turn that money into an income stream yourself.

Where Annuities Fit

There are four types of annuities that can provide lifetime income:

• Single Premium Immediate Annuities
• Deferred Income Annuities
• Qualified Longevity Annuity Contracts
• Income Riders

These are designed to create income that pays as long as you are breathing.

Protecting Beneficiaries

A common misconception is:

“If I buy an annuity and die, the money goes poof.”

That does not have to be true.

Most lifetime income annuities can be structured with a backstop so unused money goes to beneficiaries.

What About Inflation?

Inflation is real.

But there is no commercial annuity that perfectly solves inflation.

Social Security is the best inflation-adjusted income source most people have.

For everything else, the better approach is to build your income floor and adjust as needed.

How to Fill an Income Gap

If your current income is not enough, then you solve for the gap.

If you need an extra $575 per month, quote for that.

If you need an extra $1,000 per month, quote for that.

The goal is to use the least amount of money needed to contractually solve the income gap.

Where to See Your Income Options

Once you know your income floor and your gap, the next step is seeing what guaranteed income would actually look like.

You can model those numbers using our annuity calculators here:
https://www.stantheannuityman.com/ annuity-calculator/

The Bottom Line

The median retirement income in the United States is sobering.

But your personal number matters more than the national number.

Build your income floor.

Know your gap.

Use guarantees where they fit.

That is how you move from guessing to planning.