If you’ve started to make planning for retirement, you’re probably wondering how much you need to save to live happily into old age.
When you retire, you’ll be given a certain income per year from your state pension – but is this enough to meet your retirement lifestyle goals?
Read on to learn more about what is the average retirement income for a couple?
What is Retirement Income?
Retirement income is simply the money that is available to you came your retirement years. It can include the benefits you will be receiving from different retirement income streams such as social security, insurance policies, annuity profit sharing or savings plans. It can also come from assets, pensions, work, and veteran’s benefits.
In the US, the average retirement income per month in 2020 is $1,413 or below $17,000 per year.
Is it enough money to live in the coming years given that every year, prices of commodities always go high?
A survey in 2019 found out from the participants that a person will need at least 1.7 million dollars to retire. But the problem is that, a huge number of Americans are not saving and investing to reach their retirement income goal. Boston College reports that 50% of the retirees are at risk of not having enough funds to support their retirement years.
Average retirement income by state
The state you live in may affect your average retirement income, depending on the cost of living and the job opportunities available. You may have to work for longer to be able to afford a retirement in your state, and even then, your retirement income might be lower simply because of your zip code.
Average retirement income by age
Average retirement income may also be affected by your age. If you were born earlier, you’ll receive higher state retirement benefits than if you were born slightly later on. You can do a quick Google search online to find out exactly what benefits you can expect to receive by age.
Saving for retirement
It’s no surprise that so many people choose to take saving for their retirement into their own hands, rather than relying on state benefits to get them through. It’s recommended that you start saving for retirement as early as possible if you want to live comfortably when you quit your job for good. Even if retirement is still years into your future, start saving now and you’ll more than reap the benefits later on in life.
There are a number of different savings options for retirement, some of which are riskier than others. The most common ways to save for retirement in the US include the following:
A savings fund
Simply adding money to your savings account might not bring you any decent interest, but it’s a guaranteed source of retirement income for when the time comes around. If you’re too nervous to give investing a go, a savings fund might be the only retirement savings option you consider. However, everyone should have at least some money stored away in a safe savings account just in case.
Investing in stocks, bonds or real estate
You can also choose to invest your retirement money for better returns, at a higher risk. Real estate is the lowest-risk investment, and can provide you with a solid source of retirement income. Stocks are the highest-risk option of the three, and bonds are the middle ground. You might want to look into an investment plan if you’re not too comfortable with the stock market.
How Much Retirement Income Needed?
To know if the income from your retirement would be enough to support your lifestyle, start estimating what your expenses once you retire. It is also great idea if you can cut down expenditures that are not that essential. If you think your retirement income won’t suffice to make up for your expenses, develop a plan to maximize your income which may mean you will need to minimize your expenses.
Various formulas are developed to estimate your retirement expenses. This is backed up by the truth that when you retire you won’t be needing other things like commuting cost or your contributions from your retirement plans. Other expenditures may increase sure such as healthcare and travel. We know that it’s hard to predict how much will be your future expenses but when you get closer to your retirement years, you will probably have the idea of the amount of money you will probably need to put up with a comfortable way of living.
Financial trends in 2020 show that retirement income is affected by several factors such as where retirees work, how much they saved as well as the decisions they have made in the past. Despite the increase in the contributions for retirement savings, most households don’t have enough retirement savings. The National Institute on Retirement Security reports that 92% of households working fail to save up for their retirement fund or did not reach their target for a retirement. There are several ways though to increase your retirement income such as increasing your social security income and your retirement savings income.
Retiring is not as easy as just walking away from your work and head to a new journey because it entails preparation and adjusting to a new life, that is your later years. You might need to talk to your financial advisor to help you out with your retirement fund goals as well as how to maximize your income so you might feel secure in your retirement years. Knowing how much will be your projected retirement income and calculating your future spending is a very important key to secure a bright retirement ahead.