According to the U.S. Census Bureau, the average U.S. retirement income broken down by age is as follows:

Households Age 65-74: $69,000

Households Age 75 and Older: $46,000

Sources of Retirement Income

Based on information from the Pension Rights Center, income for retired Americans age 65 and older comes from the following sources:

• Social Security: 85 percent of older Americans receive Social Security retirement benefits. The average annual Social Security benefit is $18,500.
• Savings: 65 percent of retirees have income from investments and other retirement savings. The average annual account distribution is $18,000.
• Pensions: 31 percent of retirees receive a pension. You can expect that number to go down as the number of Americans receiving pensions continues to decline.
• Earnings: 24 percent of retirees work and earn income. As pointed out in Social Security and Working, those age 66 and under who draw Social Security retirement benefits while working may have their benefits temporarily reduced. The average annual earned income for older Americans is $25,000. Note that for those who work, this represents the largest single source of income.

Retirement Savings

All of this points to the need to save for retirement. You should start saving early and take advantage of the “catch-up” amounts for those age 50 and up which allow increased account contributions as retirement approaches.

Final Word

While it’s interesting to note the average retirement income, it’s more important to start planning for your retirement. Do some research so you will be better-equipped to make informed decisions when the time comes. You need to be able to answer these questions:

• When can I retire?
• How much should I save?
• When should I begin drawing Social Security retirement benefits?

Are you simply saving some of your paycheck and hoping for the best? That is not a strategy. The best way to plan for retirement is to hire a financial advisor or avail yourself to sophisticated financial modeling software. Programs like Eggstack analyze your unique situation and provide guidance on how much to save. Rather than relying on retirement rules of thumb, modeling software performs a year-by-year simulation to deliver real retirement planning. It’s your retirement and you’re the one who’s going to be living it, shouldn’t you be the one planning it?

Photo credit: Pixabay The Eggstack Blog will never post an article influenced by an outside company or advertiser. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future.