Updated: February 17, 2026
What is a Good Monthly Retirement Income?
Creating enough income in retirement is a puzzle. It is absolutely an individual measurement because everyone has a different idea of what constitutes the amount of monthly income in retirement that is considered "good."
No matter the definition, having enough money to live comfortably for the rest of your life after retirement is crucial. Creating a standard of living and building sources of income to support that standard requires discipline and a plan.
Let's review some of the basics of building that plan.
Average Retirement Income in the United States
According to the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) for 2022, the average income for U.S. adults aged 65 and older is $75,254. The median income, however, is just $47,620.
The difference between average and median income is important. Whenever the data shows that the median income is lower than the average, it's fair to assume that a small percentage of wealthier retirees may be driving the average income upward.
In light of this, $47,620 may be a more accurate representation of typical income.
It's important to note that most of these statistics regarding the income of Americans aged 65 and older do not take into consideration whether the person reporting the income is actually retired.
Therefore, it is likely that these average retirement income figures may not accurately represent someone who is truly "retired" but also show income from people working and earning money from a job. In fact, about 20% of people over the age of 65 are still working. That's up from just 10% in 1985.
Factors to Consider in Determining a Good Monthly Retirement Income
Not surprisingly, people have different perceptions of what makes up a "comfortable" retirement and what items should be on their retirement checklists.
For some, it means world travel and a sprawling home on the water. For others, it is a downsized ranch house with a nice yard for family get-togethers or a clean, functional apartment in a safe neighborhood and occasional outings to baseball games.
These lifestyle factors, in addition to other costs of living — like healthcare, food, insurance, outstanding debt, transportation, and medications — make up the expenses you will need to pay for in retirement.
Social security income can create a solid foundation to cover some of these expenses but is generally supplemented by income from pensions, 401k plans, savings, annuities, and other financial products.
It is generally understood that you may need anywhere from 70% - 80% of your pre-retirement income to fund expenses in retirement.
How to Tell if Your Projected Retirement Income is Enough
Building a budget is an important step in determining the income you will need once in retirement.
For the income part of your budget, many retirees "un-retire" after they leave their full-time job to take part-time work or consulting jobs to help supplement income and to keep busy.
These working "gigs" can be valuable for supplementing social security and can help you delay significant outflow from your retirement savings. So incorporating any anticipated income from work into your budget, especially in the years immediately post-retirement, can be an important investment for retirement income and can help cover expenses.
Once you've added up all of your anticipated expenses, it's time to calculate how large your nest egg will need to be to cover these expenses. Remember that the type of expenses will likely shift over time, with travel and hobbies more prevalent in younger ages and healthcare and prescription expenses growing as you age.
After you've figured out how much income you'll need to generate from social security and your savings to cover expenses, the next step is to calculate how large your retirement nest egg needs to be for you to produce this needed income until you pass away.
A retirement calculator is one option, or you can use the "4% rule." The 4% rule says that in your first year of retirement, you can withdraw 4% of your retirement savings and adjust this amount slightly from year to year to keep up with the cost of living.
The idea is if you follow this rule, you shouldn't have to worry about running out of money in retirement.
But the reality is that the stock market can be fickle, and it is a good idea to add additional guaranteed sources of retirement income to ensure that basic living expenses can be paid for.
Let's take a look at some great ways to ensure that you have income streams that can meet your needs, no matter what the market does.
Methods for Achieving a Good Monthly Retirement Income
If you are reading this and are under age 40, the best thing you can do to get the retirement saving ball rolling is to participate in your employer's 401k or 403b savings program.
The money is automatically deducted from your paycheck and invested in funds that you choose.
If you are able, diversifying your retirement savings vehicles is a good idea as well. This can mean investing in individual stocks, stock funds, and IRAs or Roth IRAs and having emergency money in online or bank savings accounts.
Another way to increase income in retirement is to delay the receipt of your social security retirement benefits. Taking the money past your normal retirement age is worth considering to lock in a higher monthly payment for life, even if you officially retire from the workforce much earlier.
If you are over age 40, another product that might make sense are annuities.
Annuities, especially fixed annuities and fixed-index annuities, can help you safely accumulate money prior to retirement, then guarantee income once you retire. You can even choose to receive guaranteed payments for life!
This is a unique attribute of annuities. No other financial product can provide guaranteed lifetime income.
Retirement Income Sources
Let's review the most common sources of retirement income.
Social Security
This is the bedrock of the American retirement system, providing a foundation of income for most retirees.
As we discussed, if you can afford to delay receiving benefits and believe you'll have a life expectancy well into your 80s or beyond, you'll receive more money than if you claimed earlier.
Beyond that, it's best to avoid claiming your benefits just because you (or your friends or family) feel like you should. Make sure your decision is well-researched and based on your personal situation.
Pensions
If you are lucky enough to have a pension plan from your employer, it can be a nice complement to social security payments.
Pension plans promise a specified monthly benefit at retirement, usually dependent on years of service and compensation. In 2023, though, fewer employers offer this so-called defined benefit plan, with most opting to offer a 401k plan (known as a defined contribution plan).
Retirement savings accounts (401k/403b Plans)
Most employer-sponsored retirement plans are now presented as 401k plans for traditional workers or 403b plans for public school/charity employees.
These plans do not promise a specific amount of benefits, but the employee or the employer (or both) contribute to the employee's individual account under the plan. You ultimately receive the balance in your account, which is based on contributions plus or minus investment gains or losses.
Annuities
An annuity is defined as any series of payments made at regular intervals.
While this is the core benefit of annuities, this product is also a great way to increase the value of your retirement portfolio before you retire.
Annuities come in three risk varieties:
Depending on your risk tolerance, you might choose one or a combination of all three types of annuities to build a balanced tax-deferred prior to retirement.
Fixed annuities have become very popular in the past couple of years because they guarantee a return and can shield a portion of your portfolio from risk.
Annuities can also be another addition to the foundation of your retirement plan, with the possibility of guaranteed payments for life or for a period of time that you choose.
These retirement annuities are insurance products that provide guaranteed retirement income. They are a contract between you and your insurer. The agreement is that you give your insurer money now in the form of a premium, and then they pay you a steady stream of income in retirement.
Final Thoughts
Building a retirement plan requires time, research, and, sometimes, the services of a professional financial advisor.
The best advice for people looking to build retirement savings is to start early. Participate in your 401k plan as soon as possible. Sock away as much as you can in stocks, stock funds, and savings accounts. And when the time is right, annuities can be a nice complement to these traditional savings vehicles.
Annuities have the added benefit of providing you with income that you cannot outlive when the time comes to distribute money.
Canvas Annuity offers fixed returns that are superior to most other savings vehicles. In the current volatile market, allocating part of your nest egg to an annuity from Canvas can provide peace of mind.
With Canvas, you can buy an annuity online directly from the company and do not need to meet with an agent. But if you would like to speak with someone, you can contact one of our helpful representatives today.
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