This Is The Average Retirement Income (Unexpected)

Summary

The video delves into the average retirement income, highlighting the financial struggles many face as they rely heavily on Social Security. It reveals that 12% of men and 15% of women aged 65 and older depend on Social Security for over 90% of their income. With the median monthly income for this age group being $4,199, or just over $50,000 annually, many are forced to work past traditional retirement age or depend on family and government assistance. The video underscores the importance of early planning and investment for a secure retirement, addressing the impact of inflation and the varying retirement incomes across states.

Takeaways

• 💼 Many people are not saving enough for retirement, leading to a reliance on Social Security or other forms of assistance.
• 👴 12% of men and 15% of women aged 65 and older depend on Social Security for 90% or more of their income.
• 🏡 The median monthly income for US adults aged 65 and older is $4,199, which is just over $50,000 per year.
• 🔄 A third of Americans are aiming for a phased retirement, working part-time before fully retiring.
• 📊 70% of Americans aged 65 to 69 were retired between 2016 and 2022, with higher percentages in older age groups.
• 💰 Average retirement income varies by state due to differences in wages, cost of living, and tax rules.
• 💸 Retirees in the US spent an average of $57,818 in 2022, which is above the median income for this age group.
• 🏠 Housing costs often decrease as people age, with many having paid off their mortgages or downsizing to more affordable homes.
• 💔 The average net worth of households headed by someone aged 65-74 is about $410,000, but this includes the value of their home.
• 📈 Inflation is hitting retirees hard, causing the value of their fixed incomes to shrink as the cost of living increases.

Q & A

What is the average retirement income for Americans aged 65 and older?

The average retirement income for U.S. adults 65 and older is reported to be $75,020 per year, while the median income is $50,290 according to data from the Census Bureau and Bureau of Labor Statistics [^3^].

How much do retirees typically spend on health care during their retirement?

A 65-year-old retiring can anticipate spending an average of $157,500 on health care throughout their retirement [^9^].

What percentage of retirees rely on Social Security as their primary source of income?

Approximately 40% of seniors rely on Social Security funds for their retirement [^9^].

What is the average monthly Social Security benefit for retirees?

As of January 2024, the average monthly Social Security benefit check was $1,907 [^3^].

How does the retirement income vary by gender?

Retirement-age men have a median income of $31,220 compared to women, who take in $27,350. On average, men 65 and older earn $50,490 per year compared to $40,830 for women [^3^].

What is the average annual spending for Americans aged 65 and older?

Americans 65 and older spent an average of $57,818 in 2022 [^3^].

What percentage of nonretired individuals have no retirement savings?

About 28% of nonretired individuals had no retirement savings, but more than three-fourths of them had at least some [^9^].

How much of their monthly income do retirees typically spend on housing expenses?

Retirees reported that nearly one-third of their monthly income goes toward housing expenses [^9^].

What is the average retirement account balance for an IRA?

The average retirement account balance for an IRA was $135,600 in 2021 [^9^].

How many Americans expect to work after retirement?

57% of Americans expect to work after retirement [^9^].

Outlines

00:00

💼 Retirement Income Realities

The video script discusses the challenges many individuals face in saving for retirement, with a significant number needing to work beyond traditional retirement age. It highlights the reliance on Social Security as a primary income source for many retirees, with 12% of men and 15% of women aged 65 and older depending on it for 90% or more of their income. The median monthly income for US adults aged 65 and older is reported to be $4,199, or just over $50,000 annually. The video emphasizes the importance of planning for retirement, as the average retirement income varies greatly across the US due to factors like local wages, cost of living, and tax rules. It also points out that retirees tend to spend less, with their average spending being about $20,000 less than those under 65, often due to fixed incomes, different spending habits, and fewer work-related expenses.

05:01

🏡 Financial Planning for Retirement

This section of the script delves into the financial planning aspect of retirement, noting that the median net worth for households headed by individuals aged 65 to 74 is approximately $410,000, and for those 75 and older, it's about $335,000. However, these figures include the value of one's home, and once that is subtracted, the liquid assets for many retirees may be considerably lower. The video points out that the average monthly Social Security check is $1,977, which may not be sufficient to cover all expenses, leading many to rely on additional income sources. It also addresses the issue of debt among retirees, with around 60% carrying some form of debt, which can be a significant burden due to fixed and limited retirement incomes. The impact of inflation on retirees is highlighted, as rising costs for essentials like groceries, healthcare, and housing erode the purchasing power of fixed incomes. The script concludes with advice on the importance of early planning and investment for a comfortable and secure retirement.

Keywords

💡Retirement Income

Retirement income refers to the funds a retiree receives during their retirement years. It can come from various sources such as Social Security benefits, pensions, savings, and investments. In the context of the video, it highlights the average retirement income for U.S. adults aged 65 and older, which is $75,020 per year, and the median income is $50,290. The video emphasizes the importance of having sufficient retirement income to maintain a comfortable lifestyle and the challenges many face in achieving this due to inadequate savings or reliance on Social Security.

💡Social Security

Social Security is a federal program that provides financial support to retirees, disabled individuals, and their dependents. It is a significant part of retirement income for many, as mentioned in the video, with 12% of men and 15% of women aged 65 and older depending on it for 90% or more of their income. The video discusses the reliance on Social Security and how it may not be sufficient to cover all living expenses in retirement, necessitating additional sources of income.

💡Median Monthly Income

The median monthly income is the middle value when all incomes are listed in ascending order. For U.S. adults aged 65 and older, the median monthly income is $4,199, as cited in the video. This figure is important as it provides a more accurate picture of typical retirement income than the average, which can be skewed by higher incomes of a few individuals.

💡Phased Retirement

Phased retirement refers to a gradual transition from full-time work to full retirement, often involving a period of part-time work or freelance projects. The video mentions that two-thirds of Americans are aiming for a phased retirement, which allows them to ease into retirement while still maintaining some level of income and workplace benefits.

💡Retirement Savings

Retirement savings are funds accumulated over a person's working life to be used during retirement. The video emphasizes the importance of retirement savings and how many people are behind in saving for retirement. It also discusses how retirement savings are higher than they've been since 2022, yet many seniors still rely heavily on Social Security for their income.

💡Cost of Living

Cost of living refers to the amount of money needed to sustain a certain standard of living in a particular area. The video points out that cost of living varies across the U.S., affecting retirement income needs. Retirees in areas with a higher cost of living may require more income to cover basic needs compared to those in lower-cost areas.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video discusses how inflation affects retirees by eroding the purchasing power of their fixed incomes, making it harder for them to maintain their standard of living as prices for everyday essentials increase.

💡Debt in Retirement

Debt in retirement refers to the outstanding loans or financial obligations retirees may have. The video mentions that around 60% of individuals over the age of 65 carry some form of debt, which can be a burden during retirement due to fixed and limited incomes. Managing debt in retirement can increase the amount of monthly income needed to maintain a comfortable standard of living.

💡Net Worth

Net worth is the value of all assets minus the value of all liabilities. For households where the head is between 65 and 74 years old, the median net worth is approximately $410,000, while for those aged 75 and older, it's about $335,000. The video notes that these figures include the value of one's home, and when this is excluded, the liquid savings and investments of retirees might be considerably lower.

💡Financial Planning

Financial planning is the process of managing one's finances to achieve specific goals, including those related to retirement. The video suggests that many people do not plan adequately for retirement, missing opportunities to grow their savings. It encourages viewers to start planning and investing early to build a comfortable retirement fund.

Highlights

Many people are behind on saving for retirement, needing to work past traditional retirement age.

Some retirees rely on family, friends, or government assistance to make ends meet.

The idea of a comfortable retirement seems increasingly out of reach for many.

12% of men and 15% of women aged 65 and older depend on Social Security for 90% or more of their income.

Social Security, originally a supplement, is becoming a primary source for many retirees.

Median monthly income for US adults aged 65 and older is $4,199, or over $50,000 per year.

Data sources often do not distinguish between retirees and non-retirees when reporting income.

Two-thirds of Americans aim for a phased retirement, working part-time and fully retiring at some point.

Between 2016 and 2022, 70% of Americans 65 to 69 were retired, and 83% of those 70 to 74 were retired.

Average retirement income varies across the US, with some states having retirees earning over twice as much as others.

Differences in local wages, cost of living, and tax rules contribute to the variation in retirement income.

Retirees in cheaper states might need less money, while those in more expensive areas need more.

Tax policies and pension plans can significantly affect retirees' net income.

In 2022, Americans age 65 and older spent an average of $57,818, which is above the median income for this age group.

Average spending for those aged 65 and older is about $20,000 less than what people younger than 65 spent.

Retirees tend to spend less due to fixed incomes and changes in expenses after retirement.

The median net worth of households with the head of household aged 65 to 74 is approximately $410,000.

For households with the head aged 75 and older, the median net worth is about $335,000.

Many retirees' homes represent a significant portion of their assets, and their liquid savings might be lower.

The average monthly Social Security check at the start of 2024 is $1,977, totaling $22,884 per year for individuals.

Married couples receive roughly double the Social Security amount, totaling over $3,800 per month.

Around 60% of individuals over the age of 65 carry some form of debt.

Inflation is hitting retirees hard, making it tougher for them to get by as prices for everyday things go up.

Many older adults have to cut back on essentials or use their savings faster than planned due to inflation.

Planning and investing early can help build a comfortable retirement fund and secure future.

Transcripts

what is the average retirement income

it's well known that many people are

behind when it comes to saving for

retirement with many people needing to

work well past the traditional

retirement age just to make ends meet

this struggle forces some to rely on

family friends or government assistance

to stay afloat the idea of a comfortable

and carefree retirement seems

increasingly Out Of Reach for many in

this video we'll take a look at the

average retirement income as well as

some other eye-opening information my

name is Chris and I help teach people

about money personal finance and

investing if you're interested in

improving your financial future make

sure to subscribe to the channel and hit

the like button if this video is helpful

even though retirement savings are

higher than they've been since 2022 many

seniors still rely heavily on social

security for most of their income the

Social Security Administration says that

12% of men in 15% of women age 65 and

older depend on the program for 90% or

more of their income this shows that for

many retirees Social Security isn't just

a small supplement but a major part of

their financial support this heavy

Reliance can come from not having enough

personal savings or Investments High

health care costs or the need to support

family members originally designed to

supplement retirement income rather than

serve as the primary source Social

Security is increasingly becoming

essential for many older adults without

this income where would these people be

they might be struggling physically to

continue working well into retirement

age relying on friends or family for a

place to stay or living on the dime of

their kids until their eventual

expiration the median monthly income for

us adults aged 65 and older is

$4,199 per month or just over $50,000

per year according to the mly fool

although not everyone 65 and older is

retired some might still be working so

these figures should be taken with a

grain of salt since most data sources do

not disting between retirees and non-

retirees when providing information

about reported income based on age

there's a little bit of a gray area

2third of Americans are aiming for a

phase retirement in which they'll work

full-time part-time and retire fully at

some point according to a 2024 survey

from Fidelity between 2016 and 2022 70%

of Americans 65 to 69 were retired 83%

of those 70 to 74 were retired in 88% of

Americans 75 and older were retired

according to Gallup few Americans are

retiring earlier than age 65 among those

60 to 64 32% were retired between 2016

and 2022 just 11% of those 55 to 59 were

retired and only 6% of Americans 50 to

54 were retired average retirement

income varies a lot across the US with

some states seeing retirees earning over

twice as much as those and others this

happens for several reasons like

differences in local wages and salaries

cost of living and tax rules in states

with higher wages people generally save

more for retirement out of necessity

leading to higher incomes in their later

years the cost of living is another big

factor retirees in cheaper States might

need less money to get by while those in

more expensive areas need more money to

buy simple needs like groceries tax

policies also differ with some states

giving retirees better tax breaks which

can make a big difference in their net

income pension plans are more common in

some states than others and where

they're prevalent retirees often have a

significant boost to their income plus

factors like access to Affordable Health

Care and Social Services can affect how

financially comfortable these retirees

feel all these factors combined to

create a wide range of retirement

incomes across the country in 2022

Americans age 65 and older spent an

average of

57,8 $18 according to the Bureau of

Labor Statistics and if you're paying

attention you'll see that this figure is

above the median income for this age

group the average spending for those age

65 plus is about $20,000 less than what

people younger than 65 spent that year

the lower spending can be attributed to

several factors such as having a fixed

retirement income different spending

habits or fewer work-related expenses as

people become older they're generally

not spending as much on cars or

Transportation related at ated expenses

and they don't drive as far or as

frequently and they often share a

vehicle with their spouse additionally

as people age housing cost often

decrease many older adults have paid off

their mortgage having a smaller

remaining balance or of downsize to a

more affordable home overall retirees

tend to spend less due to their income

level and the changes in their expenses

after they retire the decrease in

average spending is also affected by the

fact that people are no longer putting

money into their retirement accounts the

Med net worth of households where the

average head of household is between 65

and 74 years old is approximately

$410,000 for those aged 75 and older the

media net worth is about

$335,000 on the surface these figures

might seem relatively comfortable

however it's important to consider that

these amounts include the value of one's

home when you subtract the value of

their home the net worth figures can

look quite different for many retirees

their home represents a significant

portion of their assets and once it's

accounted for their liquid or accessible

savings and Investments might be

considerably lower this means that the

financial cushion they have to cover

day-to-day expenses health care and

other retirement costs might be much

thinner than these numbers initially

suggest at the start of 2024 the average

monthly social security check is

$1,977 which adds up to $ 22,88200

married couples receive roughly double

that totaling over $3,800 per month or

$46,000 per year although this amount

isn't terrible it often isn't enough to

cover all expenses leading many older

adults to rely on additional income

sources those who plan well might have

sufficient savings but others may not

have had such successful strategies

according to smartasset.com around 60%

of individuals over the age of 65 carry

some form of debt including credit card

balance mortgages car loans and more

while not all debt is considered

detrimental some like money owed on cash

flow positive Investments can be

considered good debt many retirees have

also borrowed against their homes when

mortgage rates were around 3%

nonetheless debt can be a significant

burden during retirement due to the

typically fixed and limited income that

retirees have managing debt in this

phase of Life can drastically increase

the amount of monthly income needed to

maintain a comfortable standard of

living the main issue isn't just the

number of retirees with debt but rather

that most of the recent increase in debt

is among high-risk households these are

households that have significant amounts

of unsecured debt or high levels of

borrowing compared to their assets

inflation is really hitting retirees

hard making it tougher for them to get

by is prices for everyday things like

groceries Health Care and housing go up

the fixed incomes many retirees rely on

like Social Security and pensions don't

stretch as far as they used to this

means that even though they might get

the same amount of money each month its

value is shrinking because it buys less

and less with costs Rising faster than

their income many older adults have to

cut back on Essentials or use their

savings faster than they planned this

financial squeeze from inflation makes

it harder for retirees to maintain their

standard of living and adds extra stress

to their retirement years most people

don't put that much effort into planning

for a comfortable retirement they often

ignore the need to plan ahead and miss

out on chances to grow their savings

this might be because they never learned

how crucial investing is they've always

delayed it or they were counting on some

other plan to take care of them in the

future luckily if you're watching this

you've got a great shot at beating the

average retirement numbers retiring

early and pulling in more income than

many others the trick is to start

planning and investing as early as you

can by getting started now and using

Financial tools wisely you can build up

a nice retirement fund and set yourself

up for a comfortable and secure future

your early efforts can make a big

difference helping you retire on your

terms without worrying about your basic

needs