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Average Retirement IncomeInsight for Planning from Retirement Statistics
Average retirement income is one of the more fascinating retirement statistics. It gives valuable insight into basic financial planning. By assessing the situation of current retirees, we can draw some conclusions that are beneficial in developing and maintaining a financial freedom plan with an eye toward retirement. In the United States, the average retirement income in 2010 was $30,158. The term “average retirement income” is used rather loosely here because this is actually the average income for all persons who are 65 and older, whether they are retired or not. This figure, as well as all other data in this article, comes either directly from United State Census Bureau reports from 2011 or from calculations made from that data. Though the data is from the United States, it provides helpful insights for people of other countries as well. Lower Retiree IncomeBy comparing average income for people in the 65 to 74 year age group to the average income they made 10 years earlier in the 55 to 64 year age group, I found that retirees have an approximately 23 percent drop in real income. It is interesting that the lowered amount of income roughly corresponds to a 25 percent drop in expenses that many advisors use in basic financial planning with their clients. Social Security Retirement BenefitsThere are various sources of income for the 65 and over age group. A significant, almost universal source is Social Security. About 87.6 percent of the group has Social Security income. This accounts for an average of $13,284 per person per year. Although many retirees are heavily dependent on this income now, it may not be wise for current workers to plan to rely on similar benefits when they retire. It is projected that under current conditions, the Social Security Administration will be unable to maintain the present level of benefits after the year 2037. With the uncertainty about the future of Social Security, many proposals are being brought forth to fix the system. Most of these would adversely affect retirees, such as raising the retirement age and lowering the amount of benefits. Pension Income In RetirementPensions are another source of the average retirement income. About 30.3 percent of persons 65 and over have an average of $17,162 in pensions per year. This is another source of income that is declining. Most companies are phasing out their pension plans. Job Wages and Self Employment EarningsOf the people in this over 65 age group, 21.1 percent had wages from jobs or self employment earnings. For them, this was a significant source of income, averaging $38,923 per person. This is a source of income that is likely to grow for retired people. Having a part-time job or business is an excellent way to stay active and to provide some extra income to maintain a lifestyle that a person may desire. There are many extra ways to make money for a retired person. Passive Income SourcesAbout 52.6 percent of persons 65 and over receive an average of about $6,680 in passive income. This is income from interest, dividends, rents, royalties, estates or trusts. This area is perhaps the one that needs to be cultivated the most in the pre-retirement years. Passive income will account for a greater portion of future retirees' average retirement income. It is essential to recognize the importance of saving money and understand how to invest money in order to build the assets to generate future passive income. Basic Financial PlanningThe average retirement income statistics show a shift from reliance on government programs and company pensions to the individual providing for themselves through work earnings and passive income. This is good because these are things that are within a person's control, with some basic financial planning. Take some time now to think about your financial future. Develop various scenarios using the retirement saving calculator. With adequate preparation, you can ensure that your average retirement income is enough to maintain a life of financial freedom in your retirement years.
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