Your retirement should be relaxed and enjoyable. You worked hard all your life, and now it's time to spend your golden years in peace. But, sadly, that is hardly possible if you need to worry about money. In this article we will give you the rundown on average monthly retirement income by state and some info on retiring in America.
Keep in mind that when talking about retirement income, we are actually talking about three factors:
Social security
Defined benefit plans
Defined contribution plans
Social Security
Social security might be the most important part of many people’s retirement plans. The amount of money you receive depends on the highest 35 years of earnings, making it a big factor for US average retirement income. Keep in mind that you need a minimum of roughly ten years of work to get social security.
Also, your benefits will be lower before if you choose to retire before you reach retirement age, which is:
66 if you were born between 1943 and 1954
67 if you were born after 1955
The earliest you can get your benefits is when you reach 62. You can also delay retirement until you reach 70, which will provide you with increased benefits. However, you will not get better benefits if you retire after 70.
Of course, you can plan to retire early, if you have made appropriate investments and maximized your expected average retirement monthly income.
Defined Benefit Plans vs. Defined Contributions
The core difference between the two is that defined benefit plans provide you with specific amounts once you retire. Defined contributions, on the other hand, are direct investments, whose payment amounts cannot be predicted completely.
Defined-benefit plans are essentially a guarantee. The company you work for bears the risk that it will provide returns on the investment the employee gave. This leads to great risk to employers and high administrative costs. You've probably noticed that these have become rarer and rarer when it comes to calculating average retirement income in the US.
A contribution plan, also known as a 401k, falls on the shoulders of the employee. They choose how much of their payroll will be deducted and added to the plan. The company will then match this contribution to a certain extent (a maximum of $22,500 in 2023).
Unlike defined-benefit plans, the employee is the one who chooses how their money will be invested within their 401k. These investments usually boil down to mutual funds, as well as annuities and stocks.
Average Monthly Retirement Income by State
The table below contains information on the average annual and monthly income, ordered by state. It has been built according to data from the U.S. Census Bureau and contains information from 2021.
| State | Average Annual Retirement Income | Average Monthly Retirement Income |
| Alabama | $25,869 | $2,156 |
| Alaska | $37,595 | $3,133 |
| Arizona | $30,173 | $2,514 |
| Arkansas | $24,353 | $2,029 |
| California | $35,615 | $2,968 |
| Colorado | $34,112 | $2,843 |
| Connecticut | $33,308 | $2,776 |
| Delaware | $31,147 | $2,596 |
| District of Columbia | $43,744 | $3,645 |
| Florida | $31,335 | $2,611 |
| Georgia | $29,806 | $2,484 |
| Hawaii | $34,826 | $2,902 |
| Idaho | $28,246 | $2,354 |
| Illinois | $31,977 | $2,665 |
| Indiana | $21,774 | $1,815 |
| Iowa | $24,411 | $2,034 |
| Kansas | $24,785 | $2,065 |
| Kentucky | $25,616 | $2,135 |
| Louisiana | $26,447 | $2,204 |
| Maine | $26,991 | $2,249 |
| Maryland | $36,289 | $3,024 |
| Massachusetts | $33,116 | $2,760 |
| Michigan | $25,612 | $2,134 |
| Minnesota | $26,971 | $2,248 |
| Mississippi | $25,816 | $2,151 |
| Missouri | $25,378 | $2,115 |
| Montana | $29,687 | $2,474 |
| Nebraska | $25,832 | $2,153 |
| Nevada | $32,286 | $2,691 |
| New Hampshire | $30,255 | $2,521 |
| New Jersey | $31,784 | $2,649 |
| New Mexico | $30,910 | $2,576 |
| New York | $30,639 | $2,553 |
| North Carolina | $26,867 | $2,239 |
| North Dakota | $27,764 | $2,314 |
| Ohio | $27,285 | $2,274 |
| Oklahoma | $24,747 | $2,062 |
| Oregon | $31,409 | $2,617 |
| Pennsylvania | $25,567 | $2,131 |
| Puerto Rico | $17,583 | $1,465 |
| Rhode Island | $29,296 | $2,441 |
| South Carolina | $28,068 | $2,339 |
| South Dakota | $26,934 | $2,245 |
| Tennessee | $25,541 | $2,128 |
| Texas | $28,671 | $2,389 |
| Utah | $30,361 | $2,530 |
| Vermont | $27,921 | $2,327 |
| Virginia | $34,371 | $2,864 |
| Washington | $31,927 | $2,661 |
| West Virginia | $23,844 | $1,987 |
| Wisconsin | $26,277 | $2,190 |
| Wyoming | $30,625 | $2,552 |
| United States of America Average | $29,072 | $2,423 |
Analyzing the Data on the Average Retirement Income by State
As you've probably noticed, these numbers vary significantly between states. Indiana, for example, has an average of $21,774 while D.C. has $43,744.
However, while this might seem shocking, consider that places with higher costs of living, like California, might make your money mean less compared to places like Alabama.
So think of investing in a retirement plan as soon as possible if you're worried about your future.
Note that the above data on average monthly retirement income by state is only an estimate provided by the Census Bureau, and your actual income will depend on your contributions and benefit plans the most.
Conclusion
The above article should give you a clearer idea about retirement in the US. If the numbers seem worrying, that should give you that extra push to plan your finances better and to, at least, start investing in your 401k plan better.
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