An older man and woman high-five while in plank pose.

This is an advertisement and solicitation.

Finding Your Number: What’s the Ideal Monthly Retirement Income for a Couple?

The ideal monthly retirement income for a couple differs for everyone. It depends on your personal preferences, past accomplishments, and retirement plans.

Some valuable perspective can be found in the 2022 US Census Bureau’s median income for couples 65 and over: $76,490 annually or about $6,374 monthly. Would you and your partner enjoy a high-quality life on this level of retirement income? Your answer may vary due to many factors. For instance, if you live in Alabama, are in good health, and have no mortgage, $6,374 may be a comfortable monthly income. However, this same income may be insufficient if you live in New York City with dependent grandchildren in high school.

This example highlights why a hyper-personalized approach is critical when calculating a couple’s target monthly retirement income. Here’s what to consider to help you determine your ideal amount.

Quantifying Family Needs and Commitments

Most estimates of a couple’s financial needs in retirement assume it’s just two people. However, you may have children or dependents that could change your monthly retirement income projections.

Simply put, the larger your family and the more dependents you have, the greater your monthly retirement income should be—more people means higher expenses. Healthcare costs, food, housing, entertainment, and other expenses can increase with each additional person in your household.

Even if you don’t have live-in dependents—but support an adult child, grandchildren, an aging parent, or a loved one with special needs—you may require a higher income than someone with no dependents.

Calculating the Optimal Retirement Age

Your age when you leave the workforce can influence what you consider a comfortable monthly income. Here are a few ways it can tip the scales.

Your Social Security Benefits

The timing of your retirement can affect your Social Security benefits. For instance, tapping Social Security benefits as early as 62 can reduce your benefit by up to 30 percent. Waiting until full retirement age (usually 66 or 67) allows you to receive 100 percent of earned benefits.

As an example, suppose you delay benefits until after full retirement. According to the Social Security Administration, your benefit can increase by 8 percent annually until age 70. For perspective, if you’re eligible for a $2,000 monthly full retirement age benefit at 67, you may only receive $1,400 if you claim at 62. If you delay benefits until age 70, you could receive $2,480 monthly.

The Savings and Investments Effect

Your retirement age can impact your accumulated savings and investments. Retiring later can allow your nest egg to benefit from compounding. It can also reduce the years you need to spread your savings, allowing for higher monthly income without prematurely running out of funds.

On the other hand, retiring younger may require you to live on a lower monthly income to reduce the likelihood of outliving your savings. It’s a balance you need to carefully consider.

One thing is for sure: as you and your partner age, aim to reduce your debt and spending.

Assessing Your Financial Situation

Your financial situation is a predominant factor in determining your monthly income goals. However, one area carries more weight than others: housing costs.

Unless you’ve paid off your mortgage, housing costs may be your most significant expense in retirement. According to a study from the Joint Center for Housing Studies at Harvard, almost 11.2 million older adults spend over 30 percent of their income on housing. A sobering 41 percent of retirees between ages 65 and 79 still carry a mortgage; it drops to 31 percent for those 80 and older.

Even if you’ve paid off your mortgage, you should still budget for housing expenses, such as property tax, maintenance, insurance, and repairs. As you age, you may need to hire professionals to complete home repair and maintenance tasks you or your partner previously performed. Many suggest budgeting 1 to 3 percent of your home’s value annually for maintenance and repair costs.

Anticipating Healthcare Costs

Health care is another substantial expense in retirement. According to the Employee Benefit Research Institute, a 65-year-old couple would need $351,000 in savings for a 90 percent chance of covering healthcare expenses. Medicare may cover some costs, but you must foot the bill for many deductibles, coinsurance, copayments, and outpatient services. Fortunately, Medicare Supplement insurance or Medigap can pay out-of-pocket healthcare expenses that Medicare doesn’t cover.

Long-Term Care

The Department of Health and Human Services projects that individuals 65 and older are 70 percent likely to need some form of long-term care services. As such, it’s often not a question of if most people will need long-term care—it’s when. Long-term care is a type of assistance designed to help you with some or all basic daily living activities, such as dressing, bathing, eating, using the bathroom, moving, and more.

While the tasks may seem menial, the costs associated with long-term care are substantial. A KFF survey found that most (90 percent) adults would find it difficult or impossible to pay the estimated $100,000 for a year at a nursing home. At the same time, 83 percent of adults say they’d find it impossible or very difficult to pay the estimated $60,000 for a single year of assistance from an aide or nurse.

Long-term care insurance can help you cover long-term care costs and empower you to decide how you want to receive care. The American Association for Long-Term Care Insurance recommends acquiring long-term care insurance between ages 52 and 64. If you forgo this insurance, your monthly income should account for the possibility of needing this service.

Factoring in Your Preferred Hobbies and Activities

How do you anticipate spending your time in retirement? Your hobbies and activities are central to your fulfillment and directly related to the retirement income you and your partner will need. Do you own an RV and plan to hit the road? Think about your fuel, camping, and travel expenses. Or do you anticipate playing a lot of pickleball? Are there club dues or fees associated with the activity?

Regardless of your lifestyle, thinking through the financial implications is critical. Ask yourself the following four questions to better understand your preferred retirement lifestyle and account for the related expenses:

1. Are You Planning to Travel?

If you wish to join the jet-set in retirement, you may need a higher monthly income than a couple who doesn’t want to log a lot of miles. Depending on the destination, traveling can increase fuel, food, entertainment, and shopping costs.

2. Do You and Your Partner Lead an Active Lifestyle?

While an active lifestyle can be less expensive than a traveling lifestyle, it may include expenses for sports equipment, club memberships, and potentially physical therapy.

3. Will You Dine Out Frequently?

Frequently visiting restaurants can require a higher monthly income, especially for a couple. Again, this can depend on location and preference, but making healthy meals at home is typically more affordable than dining out.

4. Will You Lead a Service-Oriented Retirement?

If you hope to volunteer in your area and support local organizations that do good, consider the financial implications. This lifestyle can require a lower monthly retirement income than others. However, you may incur transportation costs.

Considering Where You Live

The region you live in can dictate an ideal monthly retirement income for a couple. According to economic research, West Virginia has the lowest cost of living nationwide, followed by Oklahoma, Kansas, Alabama, and Mississippi.

Accordingly, a good monthly retirement income for a couple in West Virginia will be lower than in Hawaii, which has the highest cost of living. The Aloha State is followed by California, the District of Columbia, Massachusetts, and Alaska.

If you’re using national averages to determine your target monthly income, adjust for the cost of living in your respective state.

Seeking Retirement Planning Support Can Help

With so many factors to consider, determining a good monthly retirement income for a couple can be challenging. Reaching out to a trusted financial professional can help.

If you could benefit from a personalized look at your current situation and future goals, consider working with a Bankers Life representative, who can help align your resources, needs, and goals to chart your path forward.

We’re Here for You!

Bankers Life is here to help customers with their financial and insurance needs. Please visit us at BankersLife.com to learn more.

Bankers Life is a private company that is not Medicare, Medicaid or MaineCare and is not a governmental agency