ⓘ Important Disclosures
All annuity guarantees are subject to the claims-paying ability of the issuing insurance company. Annuities are not FDIC-insured and are not bank products. Variable annuities are securities products regulated by FINRA and the SEC. This content is for informational purposes only and does not constitute financial, tax, or legal advice.
How much do retirees actually earn? And how does that compare to what retirement actually costs where they live? The gap between average retirement income and typical retirement expenses varies enormously by state — understanding both numbers is essential for honest retirement planning.
The National Picture
According to the U.S. Census Bureau's 2024 American Community Survey (1-year estimates, released September 2025), the median household income for households headed by someone age 65 or older is $59,648 per year — just under $5,000 per month. Half of older households bring in less than that; half bring in more. Income measured at the individual level runs considerably lower, and mean (average) figures are pulled upward by high-income households at the top of the distribution.
These figures include all income sources: Social Security, pensions, retirement account distributions, wages, dividends, and other income. For most retirees, Social Security is the largest single component. According to the Social Security Administration, the average retired-worker benefit is $2,071 per month — about $24,852 annually — following the 2.8% cost-of-living adjustment.
What is the median retirement income in the United States?
The median household income for Americans age 65 and older is $59,648 a year — about $4,970 a month (2024 American Community Survey). Half of older households take in more than that, half less. Social Security is the largest single component for most retirees, averaging $2,071 a month for a retired worker in 2026, the post-COLA average as of January 2026.
Where Retirement Income Comes From
Income Source | % of Retirees Receiving | Median Annual Amount (Approximate) |
|---|---|---|
Social Security | ~90% | ~$24,852 (2026 avg retired worker, SSA) |
Defined benefit pension | ~22% (private); higher for government | Varies widely |
Retirement account withdrawals (IRA/401k) | ~40% | Varies by account balance |
Wages / part-time work | ~25% | Varies |
Investment income (dividends, interest) | ~50% | Varies widely |
Annuity income | ~10% | Varies by product and premium |
State-by-State Variation
Median household income for older households varies dramatically by state, driven by differences in historical wages (which determine Social Security benefits), pension coverage, investment wealth, and cost of living. States with high concentrations of government workers — federal, military, state, and local — tend to have higher retirement incomes due to defined benefit pension coverage. States with higher historical wages produce higher Social Security benefits, since the benefit formula is based on lifetime earnings.
# | State | Median Household Income (Age 65+) |
|---|---|---|
1 | $91,390 | |
2 | $75,539 | |
3 | $74,308 | |
4 | $72,905 | |
5 | $71,673 | |
6 | $70,712 | |
7 | $70,668 | |
8 | $69,395 | |
9 | $69,095 | |
10 | $69,010 | |
11 | $67,530 | |
12 | $67,322 | |
13 | $66,859 | |
14 | $66,450 | |
15 | $63,688 | |
16 | $62,575 | |
17 | $61,129 | |
18 | $60,814 | |
19 | $60,697 | |
20 | $60,674 | |
21 | $60,405 | |
22 | $60,166 | |
23 | $60,005 | |
24 | $59,909 | |
25 | $59,657 | |
26 | $59,258 | |
27 | $58,739 | |
28 | $58,390 | |
29 | $57,708 | |
30 | $57,155 | |
31 | $56,419 | |
32 | $56,010 | |
33 | $56,008 | |
34 | $55,938 | |
35 | $55,568 | |
36 | $55,385 | |
37 | $55,336 | |
38 | $55,235 | |
39 | $54,599 | |
40 | $54,478 | |
41 | $53,889 | |
42 | $53,095 | |
43 | $53,027 | |
44 | $52,592 | |
45 | $51,209 | |
46 | $50,483 | |
47 | $48,078 | |
48 | $47,263 | |
49 | $46,685 | |
50 | $45,778 | |
51 | $44,031 |
U.S. median household income, householder age 65 and older: $59,648. Source: U.S. Census Bureau, American Community Survey 1-year estimates, 2024 release (published September 2025). Median household income, householder age 65 and older (table B19049). Last verified July 2026.
Income is only one input. Our comparison of the best states to retire weighs state taxes, healthcare access, affordability, and quality of life alongside these income figures.
Where Retirees Keep the Most Ground
A state's median retirement income tells you less than how that income compares to what working-age households in the same state earn. Housing, property taxes, and local services are priced against prevailing local incomes — not against retiree incomes. A retiree earning the national median in a high-wage state is further behind their neighbors than the same income would put them elsewhere.
Using the same 2024 ACS table, we divided each state's median household income for householders 65 and older by its median household income for all households. Nationally the ratio is about 74% — older households take in roughly three-quarters of what the typical household earns. The state-level spread runs from 64.4% to 90.7%, and it does not track absolute income.
States where retirees hold their ground best:
- Hawaii — 90.7% (the only state ranked first in both absolute and relative terms)
- New Mexico — 80.3%, despite ranking 40th in absolute median retirement income
- Wyoming — 80.3%
- Nevada — 78.5%
- South Dakota — 78.3%
States where retirees fall furthest behind:
- District of Columbia — 64.4%, last of 51
- Massachusetts — 65.9%
- New Hampshire — 67.7%
- Colorado — 69.3%
- Washington — 69.4%
The pattern is counterintuitive, and it is the most useful thing on this page. Several states with the highest absolute retirement incomes rank near the bottom relative to their own working-age populations. Massachusetts has the 9th-highest median retirement income in the country at $69,095 — and the 50th-worst ratio, with older households taking in 34% less than the typical Massachusetts household. New Jersey ranks 4th in absolute terms and 45th relative. The District of Columbia ranks 7th and 51st.
The inverse also holds. Mississippi has the lowest median retirement income of any state at $44,031, but ranks 22nd on the relative measure — its retirees are closer to their working-age neighbors than retirees in most high-income states. Low absolute income and a severe local income gap are not the same problem, and they call for different planning responses.
For retirees in the low-ratio states, the practical implication is that local cost structures are calibrated to incomes they no longer earn. That raises the value of income sources that do not depend on portfolio performance or continued employment — and it is the clearest case for converting a portion of savings into contractual lifetime income.
Income vs. What Retirement Actually Costs
Income is only meaningful in the context of what retirement costs where you live. The Bureau of Labor Statistics Consumer Expenditure Survey reports that households headed by someone aged 65–74 spent an average of $65,354 in 2024 — several thousand dollars more than the median older household's income. And the same income buys very different retirements in rural Mississippi versus San Francisco or Honolulu.
The gap is bridged by asset drawdown: retirees spend down savings, home equity, and other accumulated wealth. This is why the adequacy of retirement savings — not just income — matters so much. Retirees without substantial assets beyond Social Security are significantly constrained in high-cost states.
Wondering whether your own income clears the gap in your state? Calculate your retirement number to see the monthly income your goals actually require.
How State Taxes Affect Net Retirement Income
Gross retirement income and net (after-tax) retirement income can differ substantially by state. Key variables: does the state tax Social Security benefits? Does it tax pension income? Does it have an income tax at all? Nine states have no state income tax; others have specific exemptions for retirement income that reduce effective tax rates for seniors well below the statutory rate.
A retiree with $40,000 in annual income — split between Social Security and pension — may owe nothing in state income tax in Florida, Pennsylvania, or Illinois (all of which exempt Social Security and pension income), but owe $1,000–$2,500+ in states that tax both. Over a 20-year retirement, this difference compounds significantly.
Which states do not tax retirement income?
Nine states levy no individual income tax at all. Others exempt specific categories — Pennsylvania and Illinois exempt both Social Security and most pension and retirement-plan income, and a majority of states exempt Social Security benefits regardless of whether they tax other retirement income. Treatment of annuity income, IRA withdrawals, and public versus private pensions varies state by state, so gross income and take-home income can diverge substantially.
State tax treatment is only part of the picture — federal taxation of Social Security and Medicare surcharges can raise your effective rate as income rises. Our tax torpedo calculator estimates how withdrawals interact with those thresholds.
Strategies for Closing the Income Gap
For retirees whose income falls short of expenses, the core strategies are: delay Social Security to maximize lifetime benefits (claiming at 70 vs. 62 can increase the monthly benefit by approximately 76%), optimize the sequence of retirement account withdrawals to minimize taxes, consider relocating to a lower-cost or lower-tax state, and evaluate whether guaranteed income from an annuity could replace portfolio withdrawals and reduce sequence-of-returns risk.
Annuities are particularly relevant for retirees in the income gap: they convert savings into guaranteed income at rates that often exceed what systematic portfolio withdrawals can reliably sustain, and they eliminate the risk of outliving the income stream regardless of how long the retiree lives.
Methodology and Data Sources
State income figures on this page come from a single consistent source and measure. Mixing vintages or switching between household- and person-level statistics is the most common error in retirement income comparisons, and it produces figures that cannot be compared to one another.
Sources
- U.S. Census Bureau, American Community Survey 1-year estimates, 2024 release (published September 2025) — table B19049, median household income by age of householder. All 51 state and District of Columbia figures, the $59,648 national median, and the relative-ratio analysis derive from this table.
- Social Security Administration, Monthly Statistical Snapshot — average retired-worker benefit, January 2026 (the post-COLA average for the 2026 benefit year; monthly snapshots drift slightly through the year as the beneficiary population changes).
- U.S. Bureau of Labor Statistics, Consumer Expenditure Survey, 2024 — average annual expenditures for households with a reference person age 65 to 74.
Why median rather than average
Median income is the midpoint: half of older households earn more, half less. Mean (average) income for this group runs materially higher because a small number of very high-income households pull the average upward. For questions about what a typical retiree actually receives, the median is the more honest figure.
Why household rather than individual
Retirement spending data from the Bureau of Labor Statistics is reported per household (consumer unit). Comparing person-level income against household-level spending overstates the shortfall. Both sides of the income-versus-cost comparison on this page are measured at the household level so the difference between them is meaningful.
Update schedule
We refresh this guide annually when the Census Bureau releases new American Community Survey 1-year estimates, typically each September, and update the Social Security and Bureau of Labor Statistics figures as new releases are published. Figures on this page were last verified in July 2026 against the most recent available data for each source.