What do older Americans really earn in retirement? Not what you see in headlines. I pulled the latest Census Bureau numbers from 2025. Here’s the thing that matters for your own finances.
According to the Census Bureau, the median annual household income for Americans aged 65 and older is $56,680. But break it down by age and it shifts a lot. Households 65 to 69 have a median of $68,860. Furthermore, those with ages 70 to 74 drop to $61,780. Once you hit 75 and older, it falls to $47,790. That last number is lower than a lot of people think.
What people 65 and older actually make, by age group
Now the average? That’s a different story. The mean numbers are way higher:
- For 65-69 it’s $102,000.
- For 70-74 it’s $92,600.
- For 75+ it’s $73,820.
But here’s the catch the Census people mention: “The average runs roughly 50 percent above each median.” That’s because a small number of high earners pull the average up. So if you’re looking at averages, you’re looking at a distorted picture.
Why the average is basically useless for planning
As per Dr. Elena Martinez, there’s something straightforward to understand: “When a client tells me the average retiree income is $80,000, their expectations get distorted. The median shows them where they actually stand compared to their peers.”
The real question: will your money outlast you? Here’s what keeps people up at night. It’s not whether you match some national number. It’s whether your own income will last as long as you do. A 70-year-old with $61,780 might feel fine.
But if their health isn’t great or their expenses are higher than average, that number might not cut it. You have to look at your own situation.
A simple way to figure out your own shortfall
Here are some things you could assess in order to build up your retirement:
- Step one: add up all your retirement income. That means Social Security, any pension, and whatever you withdraw from savings or investments.
- Step two: list your essential yearly expenses. Housing, utilities, food, health care, property taxes. Then add a 15 percent buffer for surprises like a new roof or a dental bill.
- Step three: subtract expenses from income. If you get a negative number, that’s your annual gap.
- Step four: multiply that gap by how many more years you expect to live. You can grab the SSA 2025 life expectancy tables online. Example: a $5,000 gap times 20 years equals a $100,000 total gap.
How to actually close the gap step by step
Now for the practical part. You have a gap. What do you do? First, separate your must-have expenses from the nice-to-have stuff. Essentials come first. Travel and eating out come second. Your guaranteed income should cover all essentials.
Second, look at your current guaranteed income. That’s Social Security, any old school pension, maybe a tiny annuity you forgot about. Subtract that from your essential expenses. Whatever is left is your real gap.
Third, consider an immediate annuity. It’s called a SPIA sometimes. You give an insurance company a lump sum. They promise to pay you a fixed amount every month for the rest of your life. Based on 2025 rate data from CANNEX, a 72 year old woman putting in $100,000 gets roughly $620 to $680 per month. That depends on the company’s rating.
Fourth, don’t go all in. Use just enough of your savings to cover that essential gap. Keep the rest somewhere you can access it easily. Also, if you can afford it, add an inflation adjustment rider. It lowers your starting payment but protects you twenty years down the road.
Why does this work?
Because insurance companies spread risk. Some people die earlier than expected. Their money helps pay the ones who live longer. Same idea as Social Security really.
One last thing. Always compare at least three companies with AM Best or Fitch ratings of A- or higher. Watch out for surrender charges. Those can hurt if you need to get your money back out.
Don’t let the average statistic fool you. Use the real median, run your own numbers, and build a base of income that won’t run out before you do.
Now that you got up to this point, this is just information, not a professional advice. Everyone’s situation is different. Retirees have different health, different savings, and different risk tolerance. Before you buy any annuity or change how you manage your retirement money, talk to a fee-only planner or a licensed insurance professional who answers to you, not a commission. What you do with this info is your call. No one here is liable for your decisions.
