How much monthly retirement income is enough in 2026? Many Americans question whether they’re saving adequately to maintain a comfortable lifestyle once they stop working. Recent research from the Pew Research Center* found that 40% of adults worry they could eventually run out of money in retirement. Still, the meaning of “enough” retirement income can look very different depending on the individual.
In 2025, retirees spent an average of approximately $59,616 per year, according to figures from the Bureau of Labor Statistics* (about $5,000 each month). However, that level of income may not be suitable for everyone. Financial experts* frequently recommend targeting retirement income equal to roughly 70% to 80% of your current salary.
To better estimate your future monthly retirement income needs, it can be helpful to create a comprehensive budget. Factor in your current spending and saving habits, as well as future expenses that may shift over time, including healthcare, travel, or housing costs. Whether you use a budgeting app or simply write everything down, your retirement budget should remain adaptable and evolve alongside your financial situation.
Another smart strategy is to practice living on your estimated retirement income before you officially retire. Trying it in advance can help you determine whether your projected budget comfortably supports dining out, entertainment, and other day-to-day lifestyle expenses, while also giving you a clearer idea of long-term sustainability.
If you notice a gap between your retirement goals and your current savings, don’t panic. Individuals who are still five to ten years away from retirement often have time to make adjustments by cutting expenses, boosting savings contributions, or revising their retirement expectations.
If you’re approaching retirement and struggling to figure out how you’re going to save up enough money to live comfortably, reach out to the Grady Group of Illinois, based in Warrenville, IL. We may be able to help.
Sources of Retirement Income
Retirement Accounts
If your employer offers a 401(k) plan, taking advantage of matching contributions is generally a smart move. For instance, a worker earning $100,000 annually who contributes 6% would put away $6,000 over the course of a year. If their employer contributes a 4% match, that adds another $4,000 toward retirement savings. If your budget permits, maximizing your 401(k) contributions can greatly improve your retirement outlook. Employees age 50 and older may also qualify for catch-up contributions, while workers between ages 60 and 63 could be eligible for expanded “super” catch-up contributions.
Social Security
For many retirees, Social Security replaces approximately 35% to 40% of pre-retirement income,* provided benefits are claimed at full retirement age (FRA). For anyone born in 1960 or later, FRA is age 67. Benefits may begin as early as age 62, although filing early can reduce monthly payments by as much as 35% to 40%. While some individuals need to collect benefits sooner, delaying until full retirement age—or even until age 70, the maximum age for delayed credits—can significantly increase monthly income.
Investments and Savings
A large number of Americans expect Social Security and their 401(k) accounts to be their primary sources of retirement income. However, Census data shows the median 401(k) balance for someone age 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 helping retirees build greater financial security.
Annuities
Traditional pension plans are becoming far less common outside of government jobs, with only about 15% of private-sector employees having access to one.* For retirees worried about outliving their savings, annuities can provide guaranteed income for a set number of years or even for life, depending on the specific annuity contract selected. If you want help exploring whether annuities or other retirement income solutions fit into your overall financial picture, contact the Grady Group of Illinois, based in Northern Illinois. We may be able to help you evaluate your options.
Health Savings Accounts (HSAs)
Individuals enrolled in high-deductible health insurance plans may use HSAs to prepare for future healthcare expenses, including costs associated with Medicare. Contributions are tax-free, investment growth remains tax-free, and withdrawals used for qualified medical expenses are also tax-free. Unlike Flexible Spending Accounts, HSA balances roll over from year to year and can continue growing indefinitely. HSAs are also exempt from required minimum distributions, and after age 65, funds may be withdrawn for non-medical purposes, although those withdrawals are taxed as ordinary income.
Home Equity
Homeowners age 62 or older who have accumulated substantial home equity may qualify for a reverse mortgage. This type of arrangement allows lenders to distribute funds through monthly payments, a lump sum, or a line of credit without requiring repayment while the homeowner continues living in the home. Repayment generally occurs when the property is sold, no longer functions as the primary residence, or after the homeowner passes away. However, reverse mortgages can involve risks, including possible foreclosure if obligations such as property taxes, insurance, or home maintenance are not kept current.
Downsizing
One common retirement savings strategy is to sell your current, larger property and move into a smaller or more affordable home. Although downsizing can unlock additional cash, it may also create new expenses, including moving costs and continuing housing-related bills. Carefully weighing the financial pros and cons is important before deciding whether downsizing is truly the right choice.
If you need help going over topics like these, consider contacting the Grady Group of Illinois, proudly serving Warrenville and other areas in Northern Illinois.
*Source: CNBC