Finance

The Average Senior Income Isn’t What You Think

September 25th, 2020

If you worry about your post-retirement budget, you’re not alone. In fact, a shocking new statistic shows that retirees all over the United States struggle to make ends meet. According to the Transamerica Retirement Survey, the estimated median income for older households was just $29,000 before taxes.

A little more than half of retiree households—56%—reported an income of less than $50,000 (pre-tax). The top earners (about 13% of retiree households) reported earning at least $100,000. Sadly, more than 1 in 4 earn less than $25,000 before taxes.

There could be many causes for this. Some older adults experience health problems or job loss. When you’re forced to retire before you’re ready, your retirement fund may not earn as much as you need it to. Additionally, poor investing decisions or waiting too late to begin saving can cut your retirement savings short. Finally, many people don’t realize how much Social Security will help them—or not. All too often, people’s Social Security benefits are significantly less than expected. All of these things can throw a wrench into your post-retirement budget. 

Many retirees also hold debt, which can make saving and budgeting difficult. The Transamerica study reported that 46% of retired households also have some kind of non-mortgage debt. (Although 23% of households still have mortgage debt, too.) Non-mortgage debt includes things like credit card debt, car loans, and medical debt. Plus, more and more seniors are still have student loan debt, which can seriously add up over time.

The bad news is there is no quick fix. The best way to achieve the retirement of your dreams is to start saving early and contribute often. The good news is there are some late-saving strategies you can take advantage of.

But if you’re increasingly worried about the state of your retirement fund, there are ways for you to grow your nest egg later in life. One of the easiest ways is to take advantage of catch-up contributions, which allow you to add extra cash to your account. A financial adviser can also help you figure out where to cut costs and save extra money. You can also check out some other posts on our blog to get more ideas about how to save!

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