What is a good monthly retirement income for a couple?
When saving for retirement, one guideline suggests that a retiree will need 70 to 80% of their pre-retirement income to continue with their current standard of living in retirement.
Average expenses for people ages 65 and older may often vary based on their individual needs and lifestyles.
There are options, such as maximizing high-yield savings accounts, that may help bridge income gaps in retirement.
Understanding the "good" income benchmark
The 70% to 80% replacement rule
This rule estimates that a person will likely need about 70 to 80% of their income to continue maintaining their current standard of living in retirement.
Why your needs may be lower (or higher)
Each person’s lifestyle may vary, and some people may spend more (or less) than others. Similarly, individuals will have differing levels of retirement savings, which may impact how much money they want to spend in retirement.
If you’d like to build your savings while planning for retirement, comparing competitive rates with the Raisin platform can help.
Average retirement spending vs. income
National averages for couples
As of 2024, households with a person aged 65 or older spent about $61,432 annually, on average. This works out to be approximately $5,100 spent per month, on average.
Variations by lifestyle
Average numbers may provide a general look at what a person or household may spend per month, but each household’s expenses will vary. Some households may have fewer expenses due to lifestyle factors or region while other households may have more.
Regional differences
Expenses may also vary based on which region a retired couple lives in. Cost of living in general may often be higher in metropolitan or more populated areas, like New York City, than in rural or less populated areas, for example.
Core components of a retirement budget
Essential expenses (the "needs")
One core component of a retirement budget often includes essential expenses, which are expenses for the things you need in day-to-day life. This may include health care, housing, groceries, and vehicle or transportation costs.
Discretionary expenses (the "wants")
Typically, a retirement budget will often include some spending for things you want. This amount can vary from person to person, but may often include things like travel, streaming services, or going out to eat.
The inflation factor
When building a retirement budget, it can be helpful to factor inflation into your anticipated expenses.
Sources of monthly retirement income
When budgeting, people generally include all income sources. While not an exhaustive list, you may want to consider:
Social Security benefits
Social Security benefits should generally be listed as income when putting together a budget for retirement.
Personal savings (401(k), IRA, Roth IRA)
It can also be helpful to list retirement savings accounts you may have under income, such as a 401(k), IRA, or Roth IRA.
Pensions and annuities
If you receive a pension from a previous job or have an annuity, both of those should typically be listed as income on a budget.
Part-time work or rental income
Some people earn supplemental income from part-time work or from renting out houses. All forms of supplemental income should typically be listed when building a retirement budget.
Strategies to bridge the income gap
Delaying Social Security
If you’re looking for ways to potentially bridge an income gap, you may want to consider delaying Social Security benefits until age 70. Doing so may increase monthly benefits, according to Social Security Administration guidelines.
Reducing fixed costs
When possible, it can be helpful to reduce fixed costs. For instance, you might look into whether downsizing or moving could trim your housing expenses. Paying off debt can also help reduce expenses for couples or individuals heading into retirement. And reducing spending on “wants,” such as dining out or traveling, may also be options to help bring down your expenses while bridging an income gap.
Maximizing high-yield savings
High-yield savings accounts offer a way to earn interest on your cash with regulated protection, which can be a component of a retirement strategy. In general, high-yield savings products may offer higher interest rates than a standard savings account, and they may reduce exposure to market volatility when compared to other potential investment options.
Bottom line
There is not necessarily an exact amount to aim for when it comes to retirement income or expenses because each individual or couple will have different needs. Creating a retirement budget may help you identify opportunities to increase income, trim expenses, or both. A retirement budget may also provide more peace of mind as a couple moves toward retirement.
If you’re exploring ways to increase your savings, Raisin may be able to help. Compare high-yield savings products and rates all in one convenient place.
Frequently asked questions
The amount of income needed per month for retirement will vary depending on each person’s needs and lifestyle.
The 4% rule offers a general guideline that a retiree may withdraw 4% of their retirement portfolio in the first year, with the percentage increasing in subsequent years based on inflation. This rule may apply to individuals or couples.
As of 2024, households with a person who is 65 or older spent $7,799 on healthcare.
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
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