How much income do couples need to survive & thrive in retirement?


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Being the main breadwinner in a couple usually increases the amount of income you’ll need for retirement, since you’re saving for two people instead of one. The money you save has to be enough to last for your lifetime and your spouse or partner’s, so that neither of you is left without income if you outlive the other.

Aside from differences in life expectancy, there are other factors that affect a couple’ income needs, including:

  • Lifestyle preferences
  • Estimated Social Security benefits
  • Target retirement dates for each partner
  • PT work status of each partner in retirement
  • Expected long-term care needs

All of those things must be considered when pinpointing what is a good monthly retirement income for a couple. The sooner you start thinking about your needs ahead of retirement, the easier it is to prepare financially.

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What to Consider When Calculating Your Monthly Income

One couple’s budget for retirement may be very different from another’s. A budget is simply a plan for spending the money that you have coming in.

If you’re wondering, how much should I save each month?, it’s helpful to start with the basics:

  • What do you expect your expenses to be each month?
  • How much income will you have for retirement?
  • Where will this income come from?

It’s also important to consider how your retirement income needs may change over time and what circumstances might impact your financial plan.

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Spending May Not Be as Low as You Think

Figuring out your monthly expenses is central to determining what is a good monthly retirement income. According to the Bureau of Labor Statistics, the typical couple in their late 60s or early 70s has annual expenditures of $48,885. This information is accurate as of 2016, the most recent year for which the BLS has tracked this data.

That breaks down to monthly spending of just under $4,100 per month. The largest monthly expense was housing, followed by transportation and food. If you’re planning to live frugally in retirement, spending under $50,000 a year may sound achievable, but it’s not a realistic target for every couple.

For one thing, it’s all too easy to underestimate what you’ll spend in retirement if you’re not making a detailed budget. For another, inflation can cause your costs to rise even if your spending habits don’t change. For instance, inflation for the month of April 2022 hit 8.3%. If you were retired, your purchasing power would shrink by the same amount.

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Spending Doesn’t Stay Steady the Whole Time

The budget you start out with in retirement may not be sustainable years from now. As you get older and your needs or lifestyle change, your spending habits will follow suit. And spending tends not to be static from month to month even without events to throw things off.

You may need less monthly income over time as your costs decrease. Spending among older Americans is highest between ages 55 and 64, at $56,267 per year on average. It dips once seniors hit age 65, then dips again at age 75.

It’s very possible, however, that your monthly income needs may increase instead. That could happen if one of you develops a serious illness or requires long-term care. According to Genworth Financial’s 2021 Cost of Care survey, the monthly median cost of long-term care in a nursing facility ranged from $7,908 for a semi-private room to $9,304 for a private room.

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Expenses May Change When One of You Dies

The loss of a partner can affect your spending and how much income you’ll need each month. If you decide to downsize your home or move in with one of your adult children, for example, that could reduce the percentage of your budget that goes to housing. Or if your joint retirement goals included seeing the world, you may decide to spend more money on travel to fulfill that dream.

Creating a contingency retirement budget for each of you, along with your joint retirement budget, is an opportunity to anticipate how your spending needs might change.

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Taxes and Medicare May Change in Your Lifetime

Taxes can take a bite out of your retirement income. Planning for taxes during your working years by saving in tax-advantaged accounts, such as a 401(k) or IRA, can help. But there’s no way to predict exactly what changes might take place in the tax code or how that might affect your income needs.

Changes to Medicare could also change what you’ll need for monthly income. Medicare is government-funded health insurance for seniors age 65 and older. This coverage is not free, however, as there are premiums and deductibles associated with different types of Medicare plans. These premiums and deductibles are adjusted each year, meaning your out-of-pocket costs could also increase.

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Common Sources of Income in Retirement

Having more income streams in retirement means you and your spouse or partner are less reliant on any single one to pay the bills and cover your expenses. When projecting your retirement income pie-chart, it helps to know which income sources you’re able to include.

Social Security

Social Security benefits may be a central part of your income plans. According to the Social Security Administration (SSA), a retired couple should expect to receive $2,753 on average in monthly benefits for 2022.

You can expect Social Security to cover some, but not all, of your retirement expenses. It’s also wise to consider the timing for taking Social Security benefits. Taking benefits before your normal retirement age, 66 or 67 for most people, can reduce the amount you’re able to collect.

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Retirement Savings

Retirement savings refers to money saved in tax-advantaged accounts, such as a 401(k), 403(b), 457 plan, or Thrift Savings Plan (TSP). Whether you and your partner have access to these plans can depend on where you’re employed. You can also save for retirement using an Individual Retirement Account (IRA).

Tax-advantaged accounts can work in your favor for retirement planning, since they yield tax breaks. In the case of a 401(k) plan, you can also benefit from employer matching contributions that can help you grow your savings faster.

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An annuity is a contract in which you agree to pay money to an annuity company in exchange for payments at a later date. An immediate annuity typically pays out money within a year of the contract’s purchase while deferred annuities may not begin making payments for several years.

Either way, an annuity can create guaranteed income for retirement. And you can set up an annuity to continue making payments to your spouse for the duration of their lifetime after you pass away.

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Other Savings

The other savings category includes money you save in high yield savings accounts, money market accounts, and certificate of deposit accounts (CDs). You could also include money held in a taxable brokerage account in this category. All of these accounts can help to supplement your retirement income, though they don’t offer the same tax advantages as a 401(k) or an IRA.

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A pension is an employer-based plan that pays out money to you based on your earnings and years of service. Employers can set up pension plans for employees and make contributions on their behalf. Once you retire, you can take money from your pension, typically either as a lump sum or a series of installment payments. Compared to 401(k) plans, pensions are less commonly offered, though you or your partner may have access to one, depending on where you’re employed.

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Reverse Mortgages

A reverse mortgage allows eligible homeowners to tap their home equity. A Home Equity Conversion Mortgage (HECM) is a special type of reverse mortgage that’s backed by the federal government.

If you qualify for a HECM, you can turn your equity into an income stream. No payment is due against the balance as long as you live in your home. If your spouse is listed as a co-borrower or an eligible non-borrower, they’d be able to stay in the home without having to pay the reverse mortgage balance after you die or permanently move to nursing care.

Reverse mortgages are not a form of savings but they can be used to supplement retirement income. There are some pros and cons to consider; chiefly that your heirs may be forced to sell the home to pay off the balance after you die.

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How to Plan for Retirement as a Couple

Planning for retirement as a couple is an ongoing process that ideally begins decades before you’ll actually retire. Some of the most important steps in the planning process are:

  • Figuring out your target retirement savings number
  • Investing in tax-advantaged retirement accounts
  • Paying down debt (a debt payoff planner can help you track your progress)
  • Developing an estate plan
  • Deciding when you’ll retire
  • Planning for long-term care

You’ll also have to decide when to take Social Security benefits. Working with a financial advisor can help you to create a plan that’s tailored to your needs and goals. 

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Maximizing Social Security Benefits

Technically, you’re eligible to begin taking Social Security benefits at age 62. But doing so reduces the benefits you’ll receive. Meanwhile, delaying benefits past normal retirement age could increase your benefit amount.

For couples, it’s important to consider timing in order to maximize benefits. The Social Security Administration changed rules regarding spousal benefits in 2015. You can no longer file for spousal benefits and delay your own benefits, so it’s important to consider how that might affect your decision of when to take Social Security.

To get the highest benefit possible, you and your spouse would want to delay benefits until age 70. At this point, you’d be eligible to receive an amount that’s equal to 132% of your regular benefit. Whether this is feasible or not can depend on how much retirement income you’re able to draw from other sources.

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The Takeaway

To enjoy a secure retirement as a couple, you’ll need to create a detailed financial plan with room for various contingencies. First determine your retirement expenses by projecting costs for housing, transportation, food, health care, and nonessentials like travel. Then consider all sources of retirement income, such as Social Security, retirement accounts, and pensions. By understanding your estimated budget, paying off debt, and being diligent about stock portfolio tracking, you can get closer to your financial goals.

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