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What Is a Good Monthly Retirement Income?

What Is a Good Monthly Retirement Income?

Posted on July 20, 2022
Writer: James Miller

In the United States, the median retirement income is about $1,200 a month.

While that may seem low to some, a good monthly retirement amount varies according to many factors, such as lifestyle, state, and source of income. We’ve provided some factors to consider when determining a good monthly retirement income.

Understanding the Difference Between Median vs. Mean Income

Seeing how much the average person in your state makes during retirement is a good starting point to figuring out how much you need. However, there are a couple of different equations used for this, and it is important to understand the difference.

When looking for the average monthly salary for retired individuals in your state, you can solve for mean or median salary. The mean monthly income is found by adding all the salaries and dividing by the number of people. This number can be skewed by outliers.

For instance, let’s say you want to determine the mean monthly income of five people who earn the following amount each month:

  • $1,200
  • $1,240
  • $1,300
  • $1,400
  • $10,000

You add all the salaries together and divide by five to find the mean. In this example, the mean is $3,028. However, that’s more than twice what four of the five people make. The outlier skews the results.

Conversely, the median monthly income is found by sorting the incomes and choosing the one in the middle. So, the median monthly income from our example above is $1,300. In this case, the median more accurately represents the average salary than the mean.

How Much You Should Set Aside

The amount of retirement income you will need is not a set number. It depends on where you live and how much you make, as well as the cost of living in that state. You can use a retirement calculator to calculate how much savings you will need to retire.

Additionally, you can use the 4% rule. With this method, you can withdraw 4% of your retirement savings in the first year. In subsequent years, your withdrawal will fluctuate slightly based on your cost of living and inflation. The 4% rule is for you to make sure your money has a high chance of lasting a minimum of 30 years.

To calculate your average retirement income based on the 4% method, you can follow the following formula: target retirement savings amount = annual income amount X 25.

For example, if you need an annual income of $50,000, then your target retirement savings would amount to $1.25 million.

Average Monthly Retirement Income by State

What is a good monthly retirement income? The average monthly retirement income in the U.S. is about $1,200, but that varies dramatically from state to state. The highest-earning states include Maryland ($1,500), Hawaii ($1,400), and Alaska ($1,400). The lowest-earning states are West Virginia ($800), New Mexico ($900), and Arkansas ($900), according to the World Population Review.

Also, according to The World Population Review, the following are the average yearly expenses by the state in 2022:

StateAverage Yearly Expenses
New York$69,847
New Jersey$64,736
Rhode Island$62,413
New Hampshire$55,960
New Mexico$47,184
North Carolina$48,733
North Dakota$50,850
West Virginia$47,546
South Carolina$49,507
South Dakota$50,850

The Main Sources of Retirement Income

There are three main sources of retirement income: Social Security benefits, pension, and personal savings. Let’s compare these options.


A pension is a type of retirement plan where an employer contributes to a pool of funds set aside for employees upon retirement. The money in the pooled investments grows tax-free until you retire and start withdrawing from it. There are two main types of pensions: defined benefit (DB) plans and defined contribution (DC) plans. DB plans guarantee a set payout at retirement based on your salary and years of service with the company. DC plans are more flexible, as they allow employees to decide how much they contribute and what investments their contributions go toward. Employers often offer both types of pensions so that employees can choose which plan best meets their needs.

Personal Savings

The general rule of thumb has been that when you retire, you should aim to receive 60% to 80% of your pre-retirement income. If you want to be conservative in your estimate, assume 80%. If you think that inflation will lower the value of money over time, assume 100%. And if you’re willing to take additional risks, assume 60%.

You may opt for a traditional savings account linked to your checking. However, due to the relative stability of gold investments, many individuals choose to invest in assets, such as gold coins, IRAs, and bars. Since gold investments are inversely linked to the stock market, they may experience less volatility. As a result, gold assets can be a good long-term investment for individuals looking for sustained and steady growth for retirement. Those investments in particular gold IRA accounts can serve as protectors of your retirement funds.

Social Security

Social Security is a government program that provides monthly payments for retirees and people who are temporarily out of work. It is an important asset for many retirees because it guarantees a certain level of income from the government into old age. You will receive this money regardless of whether or not you made any financial preparations for retirement because Social Security is funded by taxes on income. However, Social Security benefits are relatively meager; even if you worked at a high-paying job all your life, they would only provide a small fraction of your current salary.

You can use the Social Security Retirement Estimator to have a rough estimate of your Social Security retirement benefits. However, it is important to note that the earlier you take the benefits, the less you will receive each month.

Keep Working

Another way Americans generate revenue during their golden years is by continuing to work. According to the Bureau of Labor Statistics (BLS), 26% of Americans aged 65 to 74 have a job. That falls to about 9% for those over 75.

So, it is not uncommon to at least supplement your retirement income with revenue gained from employment.

The Amount I Should Save for Retirement

According to Investopedia, if you are in your 50s, you should have saved six times your income. If you’re in your 60s, try to have eight times your annual salary saved.

Although everyone has their own method of financial planning, if you want to retire by age 67 and live off 85% of your pre-retirement income, you’ll need about 80% of your pre-retirement income in Social Security benefits according to the Center for Retirement Research at Boston College. To get the rest of the way there, you’ll need to save between 10 and 12 times your final salary in retirement accounts by the time you stop working.


If you are ten years away from retirement and have a substantial amount in your retirement portfolio and/or other investments, don’t let the national average of $1,200 per month throw you off. You likely will not experience that amount in retirement or need to be living on that little per month. However, if you do not plan for at least $1,233 as a monthly income for your golden years, you could have problems.

A great way to plan financially for your retirement is to utilize a retirement income calculator that can help you determine where you are today and where you are headed tomorrow.

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