Retirement income can vary substantially for 70 year olds depending on a variety of factors such as savings, pensions, social security benefits, and continued employment. Understanding average retirement income levels can help 70 year olds evaluate if they are on track for a comfortable retirement.
Average Retirement Income Sources
For most retirees, income in retirement comes from three main sources:
- Social Security benefits
- Employer pensions
- Personal savings and investments
Social Security makes up about a third of income for the average retired household. The average 70 year old receives around $1,500 per month in Social Security benefits. The maximum individual benefit in 2023 is $3,627 per month for someone retiring at age 70.
Pension income has been declining over time as fewer employers offer traditional defined benefit pension plans. About a quarter of households age 65+ receive income from a traditional pension. For those with a pension, it makes up about 20% of total household income on average.
Income from savings and investments makes up around 12% of total retirement income for the average retired household. However, this source of income varies greatly based on an individual’s assets and savings rate during their working years. Retirees with higher incomes typically depend more heavily on investments and assets in retirement.
Average Total Retirement Income at Age 70
According to data from the U.S. Census Bureau, the median household income from all sources for retirees age 70 and older is around $43,000 per year or $3,583 per month. This includes income from Social Security, pensions, investments, earnings from work, and other sources.
Here is a breakdown of average total retirement income by age group for Americans aged 65 and older:
| Age | Average Total Income |
|---|---|
| 65-69 | $53,000 |
| 70-74 | $43,000 |
| 75-79 | $39,500 |
| 80+ | $30,900 |
As shown, average income drops about 20% from the late 60s to the late 70s as more retirees leave the workforce and pension incomes decline. After age 80, income decreases even more rapidly.
Factors Affecting Retirement Income
An individual 70 year old’s income in retirement can end up higher or lower than these averages based on these key factors:
Employment
Many 70 year olds continue working full or part time, supplementing their retirement income. About 20% of Americans 70-74 are still in the workforce. Total income is higher on average for those still earning a paycheck.
Marital Status
Married couples have higher average household incomes than single retirees. They also have the advantage of being able to coordinate and maximize Social Security and pension benefits.
Health
Retirees in poor health spend considerably more on healthcare costs, reducing available income. Early retirement due to health issues can also lead to lower Social Security and pension benefits.
Housing Situation
Owning a home outright provides substantial savings compared to renting or having a mortgage. Paying off housing debt before retirement helps maximize income.
Retirement Savings
Those with substantial retirement savings have greater flexibility and income sources in their later years. Maximum 401(k), IRA, and other contribution limits were lower decades ago, making it harder for some 70 year olds to accumulate adequate savings.
Pension Income
The disappearing pension leaves some 70 year olds without this stable income source. Older generations are still more likely to have defined benefit pensions providing guaranteed income for life.
Social Security Claiming Strategy
The age when retirees first claim Social Security benefits also greatly impacts monthly income. Waiting until age 70 provides 76% higher monthly income compared to claiming at 62.
Income by Wealth and Assets
Not surprisingly, retirement income is strongly correlated with household net worth and assets. According to the Federal Reserve’s Survey of Consumer Finances, the following table shows the difference in average total income by net worth percentile for households age 65-74:
| Net Worth Percentile | Average Income |
|---|---|
| Less than 25th percentile | $43,000 |
| 25th to 49th percentile | $57,000 |
| 50th to 74th percentile | $77,000 |
| 75th to 89th percentile | $123,000 |
| 90th to 100th percentile | $212,000 |
Households in the top 10% for net worth have average retirement incomes over 4 times higher than the bottom 25%. Building substantial assets and net worth is key to generating higher retirement income.
Retirement Income by Education
Another factor that correlates with higher retirement income is having higher education levels. Median income in retirement for Americans age 65+ based on education level is:
- Less than high school: $26,500
- High school graduate: $32,000
- Some college: $43,000
- College graduate: $62,000
Since education often relates to higher earnings during working years, it can result in more savings and higher Social Security and pension benefits during retirement.
How Does Retirement Income Compare to Before Retirement?
While income drops significantly for most when entering retirement, total retirement income is often still sufficient to maintain pre-retirement living standards. Surveys by Fidelity Investments and the Employee Benefit Research Institute find that on average, retirees indicate needing around 80% of their pre-retirement income to maintain their standard of living.
For a 70 year old with a final working income of $80,000 per year, an average total retirement income of $40,000-$60,000 may therefore provide adequate funds for a comfortable lifestyle. This income replacement ratio allows for expenses that often decrease in retirement like taxes, work costs, and retirement savings.
However, there is no one-size-fits-all replacement ratio. Those who want to travel extensively or live in a high-cost area may require closer to 90-100% of pre-retirement income. The key is to develop a retirement budget and income plan early on based on your expected lifestyle needs.
Strategies to Boost Retirement Income
For 70 year olds who find their retirement income is falling short of needs and goals, here are some strategies to consider:
- Delay claiming Social Security to increase monthly checks.
- Consult with a financial planner to optimize retirement withdrawals.
- Downsize housing to reduce expenses.
- Continue working part-time to earn extra income.
- Consider relocating to a tax-friendly or lower cost of living state.
- Invest in dividend-paying stocks for retirement income.
- Withdraw home equity through a reverse mortgage loan.
The Role of Retirement Savings
Personal retirement savings and investments become increasingly important later in retirement as other income sources decline. With average life expectancies now surpassing 80, savings may need to provide income for 20+ years.
Maximizing Social Security and pension benefits early in retirement can help retirees conserve and grow savings into their 70s and 80s. Withdrawing only interest and dividends from savings instead of principal can also help maintain savings balances. For many, some estate planning and legacy goals may become part of the retirement income equation as well.
Conclusion
While every situation is unique, focusing on average retirement income levels can provide a helpful benchmark to evaluate preparedness. At age 70, average total retirement income falls between about $30,000 to $60,000, with Social Security, pensions, personal savings and part-time work making up the main income sources.
Retirees can aim to have adequate income replacement from their investment and savings portfolio to supplement other income streams. Developing a retirement budget, sticking to savings and distribution plans, and optimizing Social Security benefits can help ensure retirement income adequacy throughout the 70s and beyond.