How much monthly retirement income is enough in 2026? Many Americans wonder if they are saving enough to live comfortably once they retire. According to a recent Pew Research Center* survey, 40% of adults are concerned that they will run out of money in retirement. However, what constitutes “enough” retirement income varies greatly depending on the individual.
According to data from the Bureau of Labor Statistics,* retirees will spend an average of $59,616 per year in 2025. However, that income level may not be appropriate for everyone. Financial experts* frequently recommend aiming for retirement income equal to 70% to 80% of your current salary.
A comprehensive budget can help you estimate your future monthly retirement income needs more accurately. Consider your current spending and savings habits, as well as future expenses that may change over time, such as healthcare, travel, and housing costs. Whether you use a budgeting app or simply write everything down, your retirement budget should be flexible and evolve with your financial situation.
Another smart strategy is to practice living on your projected retirement income before you officially retire. Trying it ahead of time can help you determine whether your projected budget comfortably supports dining out, entertainment, and other daily lifestyle expenses, as well as provide a better understanding of long-term sustainability.
If you notice a discrepancy between your retirement goals and your current savings, don’t worry. Individuals who are still five to ten years away from retirement frequently have time to make changes by reducing expenses, increasing savings contributions, or revising their retirement expectations.
If you’re approaching retirement and struggling to figure out how you’ll save enough money to live comfortably, contact Retirement Planners of Texas, based in Houston, TX. We may be able to help.
Sources of Retirement Income
Retirement Accounts
If your employer provides a 401(k) plan, taking advantage of matching contributions is generally a wise decision. For example, a worker earning $100,000 per year who contributes 6% will save $6,000 over the course of a year. If their employer matches their contribution at 4%, they will have $4,000 more to put toward retirement savings. If your budget allows, increasing your 401(k) contributions can significantly improve your retirement prospects. Employees over the age of 50 may also be eligible for catch-up contributions, and those aged 60 to 63 may be eligible for expanded “super” catch-up contributions.
Social Security
For many retirees, Social Security replaces 35% to 40% of their pre-retirement income,* assuming benefits are claimed at full retirement age (FRA). Anyone born in 1960 or later has a FRA of 67. Benefits may begin as early as age 62, but filing early can reduce monthly payments by 35% to 40%. While some people need to start receiving benefits sooner, waiting until full retirement age—or even age 70, the maximum age for delayed credits—can significantly increase monthly income.
Investments and Savings
Many Americans expect Social Security and 401(k) accounts to be their primary sources of retirement income. However, Census data show that the median 401(k) balance for someone over the age of 64 is only around $95,642.* Supplemental income sources such as dividend-paying stocks, bond interest, CDs, rental income, and other investments may play an important role in assisting retirees in achieving greater financial security.
Annuities
Traditional pension plans are becoming increasingly rare outside of government jobs, with only about 15% of private-sector employees having access to one*. Annuities can provide guaranteed income for a set number of years or even for life, depending on the annuity contract chosen. Contact Retirement Planners of Texas in Houston, TX, if you need help in determining whether annuities or other retirement income solutions fit into your overall financial picture. We may be able to help you weigh your options.
Health Savings Accounts (HSAs)
Individuals with high-deductible health insurance plans can use HSAs to save for future medical expenses, including Medicare costs. Contributions are tax-free, as is investment growth, and withdrawals for qualified medical expenses are tax-free. Unlike Flexible Spending Accounts, HSA balances are carried over from year to year and can grow indefinitely. HSAs are also exempt from required minimum distributions, and after the age of 65, funds can be withdrawn for non-medical purposes, though they are taxed as regular income.
Home Equity
Homeowners aged 62 and up who have accumulated significant home equity may be eligible for a reverse mortgage. This arrangement allows lenders to distribute funds in the form of monthly payments, a lump sum, or a line of credit without requiring repayment while the homeowner continues to live in the home. Repayment typically occurs when the property is sold, no longer serves as the primary residence, or when the homeowner dies. However, reverse mortgages come with risks, including the possibility of foreclosure if property taxes, insurance, or home maintenance are not paid on time.
Downsizing
One common retirement savings strategy is to sell your current, larger home and move into a smaller, more affordable one. Although downsizing can free up cash, it can also result in new expenses, such as moving costs and ongoing housing-related bills. Before deciding whether or not to downsize, it is critical to carefully weigh the financial benefits and drawbacks.
If you need assistance with topics like these, consider contacting Retirement Planners of Texas, based in Houston, TX.
*Source: CNBC