If saving for retirement is one of your primary financial goals, you may be wondering how much income you’ll need to live comfortably after you retire. One way to help answer this question is to determine the average retirement income in the U.S. and then adjust your estimate accordingly.

The average retirement income

The U.S. Census Bureau reports the average income for Americans over age 65 as both a median and a mean. In the most recent data on household income in 2023, the average income during retirement years was reported as:

Median retirement income: $54,710

Mean retirement income: $83,950¹

Read more: Calculating your retirement number

The difference between mean and median income

There’s a big difference in average income for retirement-aged Americans based on whether you’re talking about the median or the mean number. The mean retirement income is over 50% higher than the median retirement income. So, what’s the difference?

Median income is calculated by listing the income of every American over 65 in order, from lowest to highest. The number right in the middle — with half of retirement incomes higher and half lower — would be the median.

Mean income is calculated by adding all the income and dividing this by the total number of households over 65. The median number is probably more representative of the actual average income in the U.S. than the mean number. This is because households with higher incomes tend to skew the mean calculation toward the high side.

Breaking down the average retirement income

Breaking down the data by household age reveals some interesting trends. In particular, the older the household, the less the average income. Here are median and mean incomes for Americans in different retirement age brackets according to the U.S. Census Bureau.²

Data as of 2023.

Where does retirement income come from?

There are four main sources of retirement income for most Americans:

1. Financial assets: These include retirement savings vehicles like IRAs, 401(k) accounts, and annuities.
2. Pension: Pension plans are benefits that guarantee employee income in retirement. While they are no longer popular, they are still largely used by government workers.
3. Social Security: Social Security benefits are intended to supplement retirement income — not be the only source of retirement income — for most Americans.
4. Continuing employment: The idea of retirement has begun to change in recent years as many people at or near the traditional retirement age choose to continue working on a part-time basis after they “retire.”

Read more: Is Social Security income taxable?

How much retirement income will you need?

There’s no one-size-fits all answer to how much income will be sufficient in retirement. It depends on what lifestyle you want to live and your anticipated expenses. But there are a few good “rules of thumb” to help you determine how much income you might need in retirement.

A good place to start is to figure out what sources you expect to receive income from during retirement. Social Security? Pension plan? Distributions from a 401(k) account or an IRA? Rental income? Once you identify these sources, you can start to estimate how much you think you’ll be getting from each.

Many financial professionals usually recommend that you should plan on needing about 80% of your pre-retirement income in retirement. This reflects the fact that you will no longer have certain expenses associated with working like commuting, purchasing work clothes, and eating out for lunch.

So, once you’ve estimated your anticipated yearly sources of income in retirement and how much you expect to get from each, see if it’s roughly 80% of your working income. That’s usually a pretty good way to estimate if you are on the right track, but consulting a financial professional to establish a personalized plan for your retirement income may give you a better understanding of your unique situation.

How to boost average retirement income

Here are a few strategies to help boost average retirement income:

• Consider maxing out retirement savings accounts each year. A good way to help your future self in retirement is to max out or contribute as much as you can to any tax-advantaged retirement savings accounts you have access to (like a 401(k) or an IRA).
• Choose the right pension distribution option. With most pension plans, you can choose a one-time, lump-sum distribution or a monthly payment. There are several factors you should consider to determine which option will result in the most retirement income for you. These include how the pension is being funded, whether inflation adjustments are made to monthly payments, and the options for survivor benefits if you’re married.
• Look into public assistance or Veteran’s Administration benefits. This assistance can help low-income retirees pay for healthcare expenses as well as help cover the cost of meals, utilities, and legal services.
• Delay receiving Social Security benefits. You’re eligible to start receiving Social Security benefits when you turn 62 years old. However, the longer you wait to start claiming benefits, the larger your monthly benefit will be. If you start receiving benefits at age 62, this may result in a benefit reduction of up to 30%. But if you wait until age 70 to start receiving Social Security, you’ll receive the largest benefit possible.

Read more: Does waiting for a bigger Social Security benefit pay off?