What Is a Good Monthly Retirement Income?

A good monthly retirement income probably isn't that much less than your pre-retirement income.
Carissa Rawson
By Carissa Rawson 
Edited by Tina Orem

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A good monthly retirement income is typically 80% of pre-retirement income; advisors often suggest a range between 70% and a more conservative 90%. Median income for households headed by someone over 65 was $50,290, or $4,191 per month, in 2022 according to the U.S. Census Bureau

U.S. Census Bureau. Income in the United States. Accessed Sep 20, 2023.

Many people are likely eager to maximize their monthly retirement income. According to the U.S. Bureau of Labor Statistics, in 2021 consumers 65 and over spent an average of $57,818 annually, or $4,818 per month, which was more than the median income for 65-and-up households

U.S. Bureau of Labor Statistics. Consumer Expenditure Survey. Accessed Sep 20, 2023.

Here are some popular sources of good monthly retirement income and ways to increase that income. 

4 common sources of monthly retirement income

1. Social Security 

Social Security retirement benefits are typically available to people starting at age 62 if they’ve earned enough work credits (which you earn each year by working and earning income). However, it can pay to wait. The maximum Social Security benefit in 2023 is $4,555 per month if retiring at age 70, but the max is just $3,627 if retiring at full retirement age (which depends on when you were born) and only $2,572 if retiring at age 62

U.S. Social Security Administration. What is the maximum Social Security retirement benefit payable?. Accessed Mar 16, 2023.

2. Retirement plans 

Some employers may offer plans such as 401(k)s or 403(b)s, into which you can make deposits directly from your paycheck. These plans have tax-advantaged benefits that can give account balances a boost.

In general, you can begin withdrawing from a 401(k) at age 59 1/2, and you're required to start taking withdrawals when you reach age 72 (or 73 if you reach age 72 after Dec. 31, 2022)

Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs. Accessed Mar 16, 2023.

3. Savings 

This includes financial instruments such as certificates of deposit, stocks, bonds, individual retirement accounts and other sources. 

  • Certificates of deposit, or CDs, are savings accounts for dedicated sums of money for a fixed period of months or years. There are different types of CDs, such as standard, high-yield jumbo and more.

  • Stocks are financial instruments that represent ownership in a public company. You can buy and sell specific stocks yourself, or you can invest in mutual funds or exchange-traded funds, which are baskets of different types of stocks.

  • Bonds are loans to companies or governments. They are fixed-income instruments, meaning they pay interest at regular, predictable rates and intervals. That can make them attractive to retirees. You can buy and sell specific bonds yourself, or you can invest in bond mutual funds or ETFs, which are baskets of different bonds.

  • An IRA account is a tax-deferred investment account. Depending on which type of IRA you choose (Roth or traditional), your contributions may be tax-deductible or withdrawals may be tax-free. Here are the key differences between Roth and traditional IRAs.

Roth IRA

Traditional IRA

Key differences

  • No immediate tax benefit for contributing.

  • Contributions can be withdrawn at any time without taxes or penalties.

  • Ability to contribute is phased out at higher incomes.

  • Qualified withdrawals in retirement are tax-free.

  • If deductible, contributions reduce taxable income in the year they are made.

  • Deductions can be phased out depending on income.

  • Distributions in retirement are taxed as ordinary income.

  • There are required minimum distributions once you reach a certain age. That age was previously 72; in 2023, it increased to 73 and in 2033, it will increase again to 75.

Contribution limit

$6,500 in 2023 ($7,500 if age 50 and older).

Early withdrawal rules

Roth IRAs allow contributions to be withdrawn at any time, but earnings distributed before age 59 1/2 may be subject to a 10% penalty and income taxes. There is also a five-year holding rule for Roth IRA investment earnings.

Unless you meet an exception, distributions from a traditional IRA before age 59 1/2 are subject to taxes and a 10% penalty. This applies to both contributions and investment earnings.

4. Pensions 

Although less common these days, employers such as the military and the federal government may offer pension plans. Pensions are usually defined benefit plans, where the amount you receive in retirement depends on years worked and earnings over time. 

In general, monthly retirement income from a pension can’t exceed either 100% of your average compensation for your highest three consecutive calendar years, or $265,000 (the 2023 threshold), whichever is less. The payments are subject to cost-of-living adjustments

Internal Revenue Service. Retirement Topics - Defined Benefit Plan Benefit Limits. Accessed Mar 16, 2023.

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Ways to increase your monthly retirement income

Employer matching

If you’re still working, be sure to take a look at the retirement plans your employer offers. Some employers match the deposits you make to a 401(k) plan.

  • To maximize the amount of free money you can get from that arrangement, fund your 401(k) at least up to the amount required to capture matching contributions, which is typically between 3% and 6% of your annual salary.

  • Employer matching arrangements vary but frequently range from 50% to 100% of your contributions, up to that limit.

  • If you’re under age 50, your maximum allowed 401(k) contribution is $22,500 in 2023; if you’re 50 or older, the max is $30,000 in 2023



Purchasing a home is an investment and can be valuable during retirement, especially if home prices have risen since you bought the property. The value of your house minus how much you owe on it is called equity. Selling your home and moving to a more affordable place can free up some of that equity for retirement. 

Even better, up to $250,000 of capital gains for single filers ($500,000 for joint filers) are typically not subject to federal capital gains tax when selling your primary residence.

Reverse mortgage

A reverse mortgage is a loan against the equity in your home. You receive a lump sum, a series of payments or a line of credit, and you repay the loan when you sell or move out of the home. 

You need to be at least 62 and on a fixed income to qualify for this option. You’ll also need to have a low mortgage balance or own the home outright

Federal Trade Commission. Reverse Mortgages. Accessed Mar 16, 2023.

🤓Nerdy Tip

Payments from a reverse mortgage typically aren't subject to federal income tax. However, for every dollar you receive from a reverse mortgage, the balance on the loan grows. 

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