Retirement income and expenses: are our benefits and savings enough?


The Pension Rights Center reports in 2014/2015 retirees received income from five primary sources. Percentages are based on retired couples age 65 and older:

  1. Social Security:  84%
  2. Assets:  62%
  3. Pensions:  37%
  4. Earnings:  29%
  5. Public assistance:  4%

According to NewRetirement, average and median income in these areas for a retired couple 65 and older looks something like this:

  1. Social Security:  $1,360 (average income per month)
  2. Assets:  $1,542 (median per month)
  3. Pensions:  $781 (median per month, private)
  4. Earnings:  $2,916 (median per month)
  5. Public Assistance:  $545 (median per month)

These amounts vary dramatically from retiree to retiree depending on age, general health, age at retirement, marital status, and which retirement income sources are available to him. These teach us a few different facts about how retirees are earning retirement:

  • The vast majority of retirees depend on Social Security for part or all of their retirement income.
  • After Social Security, most retirees fall back on their personal financial assets, such as savings accounts, 401(k)s, rental properties, IRAs, and income from investments. Though Social Security was only designed to supplement this kind of income, we see only 62% of retired couples earn asset income compared to the 84% of couples collecting benefits. Based on these figures, we can infer as many as 38% of seniors have no such personal savings or investments to rely on–and that these seniors are very likely to be subsisting heavily or entirely on Social Security.
  • The pensions of the past are disappearing quickly. Though around 88% of American workers were covered by private pensions between the 40s and 70s–and therefore Social Security benefits were designed around the assumption that retirees would have them–only 37% (and dropping) of retiree couples have any kind of pension whatsoever. At less than $800 per month for those who do, pension payments are unlikely to put much of a dent into monthly expenses.
  • Slightly more than a quarter of retirees choose to or are able to work after retiring. Though earnings from post-retirement jobs represent the largest chunk of income per month for working retirees, most seniors don’t continue to work. This can be out of necessity–due to illness, declining physical health, spousal or some other kind of caretaking, or the need for immediate monthly income due to job loss. However, the number of seniors in the workforce is rising. Many seniors find that without income from earnings, there’s no way they can afford their retirement expenses.

All said and done, the median income of a retired couple between 65 and 74 years old is about $47,432 per year. This amount rises considerably for couples between 55 and 64, and drops significantly for those 75 and older.


An article published today at The Motley Fool examines the total average expenses for American retirees per year. It identifies five areas of spending on necessities for every retiree:

Healthcare: the average 65 year old retired couple will spend approximately $18,850 per year (or $1,570 per month)

Housing: 30% of retirees still have mortgage debt, but those who have paid off their homes still spend a significant amount each year to maintain their homes (and many seniors don’t own their homes and pay rent). A retiree can expect to pay around $15,528 per year on housing ($1,294 per month).

Groceries: retirees spend $4,140 per year ($345 per month) on groceries. This does not include restaurants or meals prepared outside of the home.

Transportation: retirees spend about $6,852 per year ($571 per month) on transportation.

Clothing: retirees spend about $1,417 per year ($118 per month) on clothing.

In total–without factoring in any kind of recreational spending or the cost of monthly bills and utilities–retirees face about $46,787 in expenses every year. Broken out monthly, this is about $3,899 each month on basic necessities.

That’s $46,787 in expenses against $47,432 in income per year. That leaves an unrealistic $645 per year to not only cover bills and any unexpected expenses, but also to fund hobbies, trips, and activities for leisure.

No wonder the number of retirees re-entering the workforce or pushing back their retirement as long as possible is rising–even exploring a variety of retirement income options, the average senior couple is only breaking even with absolutely nothing left over for enjoyment.

The situation is even direr for retirees without financial assets, a pension, or wages to fall back on. The average yearly Social Security income for a retired couple is $32,640. Retirees simply can’t afford to retire on their benefits alone without major sacrifices on necessities–sacrifices that can have a serious impact on their health and wellbeing.

But with pensions vanishing, 401(k)s providing unstable monthly income (many 401(k)s were destroyed by the recession of 2008), and lacking the ability to push off retirement or continue working, Social Security benefits are often the lifeline between seniors and destitution.

This is what experts are calling the retirement crisis. Despite many Americans’ best efforts to save and prepare, many find that their best efforts still leave them stretching pennies at the end of each month. The crisis is very real, and stable adequate Social Security benefits are more important to seniors than ever.

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