Americans hoping to retire soon aren’t likely to feel that the timing’s ideal. Even those with decades worth of savings are taking huge hits, no thanks to the triple whammy of inflation, high interest rates and a volatile stock market.
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Yes, inflation dropped to 4.9% in April. But have incomes kept up? With fears of a pending recession and worries about the country defaulting on its debt, that question suddenly matters much more. And is there any hope Social Security can come to a retiree’s rescue?
For many Americans who count on Social Security as the foundation of retirement income, it’s next to impossible to make do. Social Security retirement benefits averaged $1,782 per month in February, for a total of $21,384 per year, according to the Center on Budget and Policy Priorities. Broken down weekly, that’s roughly $450, not exactly a king’s ransom.
And even if the total income for retirees includes other sources, is the final tally enough?
What the average American retiree makes
Americans 65 years and older reported a median annual income of $47,620 in 2021, according to the United States Census Bureau. However, the median for all households came in much higher, at $70,784. Furthermore, the 65-and-older figure was 2.6% lower than in 2020. Especially once medical expenses are factored in, it’s risky at best to count on Social Security to cover all retirement expenses.
Still, not all Americans over 65 are actually retired; they may still bring in income from work. So the big question is this: If you take in roughly $47,000 annually from Social Security alone, but can add to it, what will your quality of life look like?
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The many sides of retirement expenses
To answer that question, a number of critical factors must be addressed: the place you live and its cost of living, your overall health, and the expenses you carry, discretionary versus necessary.
The Bureau of Labor Statistics broke down the expenses of those 65 and older, taking into account combined income sources, including savings and Social Security benefits, Americans aged 65 and over spent an average of $49,872 as of 2021 — higher than that $47,620 median annual income figure cited above. The expenses break down to $54,418 for those 65 to 74 and $43,316 for those 75 and over.