The average retirement income in the United States varies by your region and age. However, understanding your number in relation to the “Average American” can be very helpful in planning.

Deciding how much money you need to retire comfortably is a big decision. Sometimes people underestimate the amount of their after-retirement expenses. Then, they are stuck in a position of having to find another job to supplement their income or live less comfortably than planned.

Looking at the average retirement income can help you get a good idea on what your needs will be in retirement.

Average Retirement Income 2019

The US Census Bureau states that the average retirement income for Americans over the age of 65 was a median of $47,357 and a mean of $73,288. Interestingly, those two numbers are drastically different when looking at these same group of data. This is because median and mean are calculated differently and each of those have advantages and disadvantages.

Median Retirement Income

The median retirement income represents the middle ground of everyone. By taking everybody’s retirement income and figuring out what number is in the middle of all of those. This can be a better way to evaluate how much most people have in retirement because it isn’t skewed by extreme high numbers.

Mean or Average Retirement Income in the US

The average or mean takes all of the retirement incomes, adds them together, and then divides them by the total number of retired people evaluated. This is not always the most accurate because extremely high numbers will pull the median above what the majority of the population actually makes.

So, when looking at the statistics generated by the US Census Bureau the median of $47,357 is likely a more representative picture of the average retirement income.

Trends in Average Retirement Income

Looking at the average retirement income based on age groups reveals more interesting factors to consider. As you look at older groups of Americans in retirement, their average cash flow in retirement is significantly lower than that of their younger retired peers. For instance, in households aged 55 to 59 the median income is $73,711 while those aged 75 and above have a median income of just $34,925.

This is likely due to the increased inflation overtime and what someone needed to retire 20 years ago was significantly less than is required today for the baby boomer generation. Keep that in mind when planning your own retirement income; as time goes on money is likely to be worth less and will not go as far.

State Average Retirement Income

Of course, these average retirement incomes are based off of the entire country as a whole. Consequently, they are vastly affected by the different expenses of each state. So, let’s look at the most expensive state and the cheapest state to retire in based on average retirement income.

Unsurprisingly, Hawaii comes in at the most expensive state to retire in. The average savings required to retire comfortably in Hawaii is $1.84 million. Considering that Hawaii also has the highest life expectancy out of all the states at 81.5 years old, this money needs to last a long time.

Mississippi, on the other hand, comes in at the lowest average savings required of just $617,661 Mississippi also has the lowest life expectancy of all the US states at 74.5 years. This means that the retirement savings don’t typically need to last as long.

Where does Retirement Income come from?

You may be wondering where people are getting an annual retirement income from. There are several different sources but some of the most common will be listed below.

Social Security Income

85% of people aged 65 and above receive social security. In 2020, the average monthly Social Security payment was $1,503. The US government created Social Security as a supplement to retirement income. Not a primary source of it. However, many people rely heavily upon the income received from it.

Related Reading: Social Security Lump Sum Death Benefit

Assets

Another large group of retirement income is going to come from people’s assets. This is the accounts that they have invested in throughout their careers, such as 401K’s, IRA’s, and other savings accounts. While many Americans expect their asset accounts to be their main source of income during retirement, studies have shown that most people do not have enough saved to live off of. In fact, half of those receiving income from assets receive less than $1,754 every year.

Working

Looking at some of the numbers above, it’s not surprising that many retired Americans find that they need to go back to work in order to make ends meet. According to the Bureau of Labor Statistics 32% of those aged 65 to 70 and 11% of those aged 75 and above are expected to rejoin the workforce by 2022. Transamerica also estimates that over half of those above the age of 65 will continue to work or don’t plan on retiring. The reason for this is mainly due to financial reasons. For example, being unable to retire based off of their current savings.

Related Reading: Jobs for Retired People

How to Increase Retirement Income

Looking at some of these numbers may make you a little worried about your retirement. However, there are several things that you can do to help increase your retirement income before you get there.

Delay Social Security Income

For those who are already in retirement, delaying Social Security Income can be a great option. It can boost your income down the line. If you wait to start benefits you could earn an additional $300 or more every month.

Increase contributions to asset accounts

Before your retirement, you should be contributing to an asset account or multiple if you can. During your younger years, focus on maxing out contributions, especially if your company offers matching benefits. As you age, focus on decreasing spending and increasing your average savings.

Once you’ve retired, unfortunately it’s difficult to increase your asset accounts enough to make a significant difference. At this point, you will have to focus more on reducing your average spending to make your money go further.

Delay Retirement

If you enjoy the work that you’re doing, delaying your retirement may not seem like a bad option. By increasing the number of years you work, you increase the amount that you can save. As a result, you can put that towards a comfortable retirement. This could be one of the best ways to boost your retirement income going forward.

Conclusions on Average Retirement Incomes

Retiring comfortably takes a lot of planning and saving throughout your life. It’s easiest if you start planning for retirement as soon as you begin working. This allows for the compounding of your assets. However, as we age and look at retirement approaching sooner, we can still do some of these things to help create the future that we want.

Further Reading:

• How to Apply for Medicare

• Is Medicare Supplement Plan F Going Away?

• Things to Do in Retirement

The post What is Average Retirement Income in America? appeared first on Medicare Life Health.

As a baby boomer you know how to have a little bit of fun, despite what all those pesky millennials keep saying. We searched the internet to find you the most fun online baby boomer test list.

So, take a look at some of these quizzes and find out just how boomer you are.

What Percent Boomer Are You?

This quick quiz by BuzzFeed is a fun, lighthearted way to see how much of a boomer you are. Go through, select what things you have done or experienced, and see your results. Some of the options are: used emojis in the wrong context, gotten confused using Facebook, and written a check at the grocery store.

Which Boomer Are You?

Another fun quiz by Buzzfeed is which boomer are you. This one’s asks a lot about millennials and your feelings towards them. It starts off strong with “pick a reason to hate millennials”. Our result was Phyllis, who is 57 and gets a little feisty from time to time.

Only a True Baby Boomer can beat this Test

This quiz was put out by The Washington Times and is meant to show how much you experienced as a boomer. It asks questions about popular TV shows, music, and fashion that only a true baby boomer would have experienced. Get your results and send this to your friends to see who the best baby boomer really is.

Are You a True Baby Boomer?

Do you remember using rotary phones and when bottled milk was delivered to your door? If so, then you may be a true baby boomer. Take this quiz to experience a dose of nostalgia for your childhood and see just how much of a boomer you really are. These millennials nowadays just don’t understand how good they have it.

Sorry Millennials, Only Boomers can get 18/20 on this Quiz

Last, we have another fun quiz by BuzzFeed. This quiz is guaranteed to separate the true baby boomers from everyone else. Looking at popular games, music festival’s, fashion, and boomer culture you can prove once and for all that you are the real deal.

Baby Boomer Test Conclusions

You may have been born at the right time, but without taking these tests can you really say that you are a true baby boomer? We don’t think so. Take these tests to impress your friends with your boomer knowledge and have a little fun at the expense of millennials.

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Minimalist Living, Minimalism, Conscious Consumerism, Simple Living, The Joy of Less, Decluttering, Downsizing… Perhaps you have encountered these words recently and realized this is a movement spreading across America. Minimalist living is nothing new, but weary Americans coming off the consumerism roller-coaster, are discovering it again.

Minimalism Across Generations

Millennial Minimalism

Minimalism is appealing across generations, but it seems to be most appealing to the Millennial Generation. The Millennial generation (born 1981-1996) grew up with the high spending of the 1990’s and the bubble bursts of the 2000’s. Exiting school with a poor job market and lots of debt shaped the way Millennials see the world. Moreover, the highlighted effects of climate change from global consumerism are concerning to this generation which will most likely live to see the effects of our changing weather.

According to Forbes, 78% of Millenials would rather spend money of experiences than on stuff. (59% of Baby boomers say the same thing.) Millennials are opting for smaller house, smaller carbon footprints, and sharing cars/tools/etc. They are decluttering and donating the remnants of their early spending, and the mainstream is taking notice.

Baby Boomer Minimalism

The Baby Boomers are noticing too. As we mentioned, over half of the Boomers said they would rather spend money on experiences than things. However, this number is far below the Millennial count, and Boomers have a much more complicated relationship with things.

The Baby Boomers (born 1946-1964) grew up with rapid U.S. economy growth, the rise of the suburbs, and the marketing of the “American Dream.” As a result, Boomers were the generation of accumulation. Generation X (born 1965-1981) was not far behind in picking up where the boomers left off in consumption of stuff.

Now, the Baby Boomers are entering retirement in droves (10,000 Boomers each day reach retirement age) and sometime after this (hopefully a long time after this) they will pass. What happens to all their stuff?

Unloading Your Stuff for Minimalist Living

Here is the new reality: the generations after you do not want your “stuff.” Heirlooms to one generation are now the junk of the next generation. This is not to say that nothing is precious. You might have a few very special objects that can be confidently passed down. However all the china, crystal and large pieces of furniture that were once considered essential and now considered (heavy) burdens.

Step number one will always be – STOP buying more stuff! Once you have accepted this concept as more than theory, it is easier to move on to step two – minimizing your stuff.

Traditional Downsizing and the Rise of Sweedish Death Cleaning

Let’s say you are a Baby Boomer (as an example, this applies to all ages), with a average to above average living space and perhaps even a storage unit. You have accumulated many things in a large amount of categories including clothes, shoes, accessories, kitchen wares, furniture, decor, outdoor tools, camping gear, exercise equipment, beauty supplies, cars, holiday decorations, etc.

How does the responsibility of this amount of stuff make you feel? Moreover, who will inherit this responsibility when you are gone?

There are several ways to look at this situation that fall along the spectrum of minimalist living:

• Organizing
• Decluttering
• Downsizing
• Minimalist Living

Let’s look at each step on the journey:

Organizing

Organizing is not minimizing. It is taking what you have, sorting it out and putting into a manageable system so you can use it and enjoy it effectively. It can be helpful to you, and those that have to sort through your stuff later, but it does not take away any of the burden of material things.

Organizing will always have a place in the process of minimizing. You will need to organize what you have at every step in the minimalist journey. In addition, organizing will get easier as you let go of more and purchase less.

Decluttering

Decluttering is the first step in embracing minimalist living. It involves not only a physical shift of letting go, but also a mental shift into what it means to live more with less.

Marie Kondo’s book, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing, brought decluttering into the spotlight in 2014. (As did her Netflix special a few years later.) It is still a great book to start you on your journey of letting go and learning to find the joy of living with less. Are you unfamiliar with this book? The premise is to only allow things to exist in you life that “spark joy.”

For example if a pair of shoes does not bring you joy – get rid of them. If you have 10 shirts in your closet, but only 2 shirts make you feel good and look good (i.e. bring you joy) then you have 8 shirts too many. Kondo also has a very effective system of gathering, sorting and deciding what stuff stays and what goes.

Downsizing

Downsizing goes beyond decluttering and challenges us to face our mark on this world and what we might leave behind. In this way, we consider how our current living situation is affecting our own happiness and the happiness of those around us.

For example, consider the size of your living space. How much space you live in affects your comfort level, but it also dictates the amount of responsibility (or burden) you have. Your space size decides how much time you spend cleaning and maintaining and how much money you spend doing these activities. It also affects those around you by the amount of energy you use (your carbon footprint) and the amount of resources you use to maintain your home.

When you pass, your responsibility (burden) for all of your things becomes someone else’s responsibility (burden). The Gentle Art of Swedish Death Cleaning is a very recent book on an old subject. It is dedicated to helping people unload their stuff now, so their loved ones will not have to when they pass.

When done in the Swedish fashion, downsizing and decluttering becomes an act of love. Moreover, it becomes a journey that allows you to share experiences and meanings behind objects and heirlooms, before you part with them.

Minimalist Living

Finally, after you have organized, decluttered, and downsized, you may just be ready to embrace a minimalist life. Minimalism asks you to let go of anything that does not serve you or bring you happiness. It favors quality over quantity, and conservation over consumerism.

More than any of the other step, minimalism is a lifestyle. You get to define what simple living means to you. Maybe it means only owning 30 items of clothing or letting go of a large house or an extra car. Minimalism can free up your cash now that you have stepped off the consumer wheel. Maybe that means you can retire early – or even retire at all!

Above all, minimalism can give you freedom. It is amazing how much stress and pressure comes from our accumulation and maintenance of our stuff. If you are looking for a guide to start you on your path to minimalist living, then I have a few recommendations:

• The More of Less: Finding the Life You Want Under Everything You Own. This book by Joshua Becker is an excellent starting point for any curious reader. It was one of the first minimalist books I read, and it reached me right where I was at – in my suburban home with a crowded garage.
• Project 333. For those of you that want to create a minimalist life, but would like to start smaller, Project 333 will help you minimize your wardrobe. This is a website/blog that will challenge you to evaluate what you really need in regards to clothes, shoes and accessories.
• The Minimalists. This website will lead you to articles, podcasts, movies and other resources that will help you discover more about minimalism and the people that practice it.

Going Forward with Minimalist Living

Whatever stage of life you are in, it is good to know that it is not to late to minimize! It is just going to be a lot harder for some. Starting small with one specific area or project will help. As will understanding that letting go of stuff is a journey. We are never really done, and choosing a minimal lifestyle is an everyday process. However, it is worth is when you consider all the benefits: time freed up, money saved, resources conserved, and stress relieved.

The post Minimalist Living appeared first on Medicare Life Health.

Retirement is changing, whether you like it or not… whether you are prepared for it or not. Let’s lay down the new rules of retirement and how to follow them, bend them and break them for your needs.

This is the introduction article to our New Series: The New Rules of Retirement. The Next Article in the Series is Jobs For Retired People.

Rethinking Retirement

You have the freedom to define the word “retirement” to best suit you and your needs. Retirement might have been cut and dry for the previous generations, but it is all over the board for those pondering it now.

We all know the old playbook – put in your time at a company – retire after 40 years – receive your pension and social security. This playbook was scrapped for many in the baby boomer generation on. Events beyond our control may have set us back or have caught us off guard.

Depending on if this happens to you later in life or earlier in life, there are still ways to enjoy a “retirement.” Moreover, some might find the new ways of providing for retirement even more fulfilling than the old ways.

A Case Study in The New Rules of Retirement: The “Average American”

Let’s say that you are the “Average American” who is of retirement age. (We are talking – the most average of average.) You decide to retire at 66, the current full age of retirement. Right now, the average Social Security check for the Average American is $1,461 a month.

In addition to Social Security, the “Average American” will have about $172,000 in retirement savings at age 66. This is based on a (median estimate instead of average).

Then, let’s assume you made about $60,000 a year in your last years, and you are about to retire today. You estimate that you will need about 70% of that amount to live in retirement. So, you need $42,000 a year, or $3,500 a month to fund your modest American retirement. (This is all in current dollars, not future money for this example.)

To be reasonably safe, we will assume you will live to about 90 years old and your savings will stay in the stock market with a 5% rate of return in conservative investments.

Just How Screwed/Set are You – The “Average American”?

If you live to 90, for this case study, the math says you will need about $470,000 in savings to compliment your social security (in today’s dollars). However, you only have $172,000. In this scenario (living off of $42,000 a year) you are short $298,000.

You will have $2,205 a month to spend instead of $3,500
= a deficit of $1,295 a month.

This adds up to living off of $26,460 (including social security) instead of $42,000.

Plus… TAXES!

On top of this, we have not even taken into account taxes! Depending on how much you withdraw each year, and where you have your money stashed (401k? Roth?), you may need to pay taxes on your retirement income. Austin, at The Logic of Money, does a good job on quickly breaking down retirement taxes in this article here.

So, What Do You Do?

Many Americans will accept their fate and live on their fixed income, or they may decide to stay in their full-time job longer. However, that does not need to be you! Being retired does not need to be a do nothing sentence.

In Comes the New Rules of Retirement

The New Rules say you can make up the difference by making passive income and participating in side jobs. (This is what the kids call side hustling!) Moreover, you can still maintain your retired status find ways to do things you love (or hopefully come to love).

With your side job, you can showcase your skills/expertise or learn a new skill. You only need to make about $1,300 a month, so there the pressure is revealed to find something that just “pays the bills.” Retirement is a time to spend time doing things you enjoy with people you enjoy. You can tailor your experience to meet your needs with a little bit of planning and initiation.

The new rules of retirement say you have the freedom to define the word “retirement.” You can still be retired and bring in extra income in our new economy.

Passive Income and Side Jobs for Retirement

Our next articles in our New Rules of Retirement series will help you explore all the avenues of making extra money. We will explore traditional jobs as well as new jobs available to retirees who need a little extra income.

READ IT HERE: Jobs for Retired People

You can also get a jump start by reading about our favorite retirement money books here.

The post New Rules of Retirement appeared first on Medicare Life Health.