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The amount of money a couple needs for retirement can depend on several factors, including age, health, life expectancy, location, and desired lifestyle. There’s no exact number that represents what is a good monthly retirement income for a couple, as every couple’s financial needs are different.

Creating a retirement budget and considering what might affect your cost of living can help you narrow down how much monthly income you’ll need. You can use that as a guide to decide how much you’ll need to save and invest for retirement.

How Being a Couple Affects Your Income Needs

Being the main breadwinner in a couple usually increases the amount of income you’ll need for retirement, since you’re saving for two people instead of one. The money you save has to be enough to last for your lifetime and your spouse or partner’s, so that neither of you is left without income if you outlive the other.

Aside from differences in life expectancy, there are other factors that affect a couple’ income needs, including:

•   Lifestyle preferences

•   Estimated Social Security benefits

•   Target retirement dates for each partner

•   Part-time work status of each partner in retirement

•   Expected long-term care needs

•   Location

All of those things must be considered when pinpointing what is a good monthly retirement income for a couple. The sooner you start thinking about your needs ahead of retirement, the easier it is to prepare financially.

It’s also important to keep in mind that numbers to be used for the sake of comparison can vary widely. Consider this:

•   According to the Pension Rights Center, the median income for fully retired people aged 65 and older in 2023 was $24,190.

•   The average income after taxes for older households in 2022 was $63,187 per year for those aged 65–74 and $47,928 per year for those aged 75 and older, according to U.S. News Money.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

What to Consider When Calculating Your Monthly Income

One couple’s budget for retirement may be very different from another’s. A budget is simply a plan for spending the money that you have coming in.

If you’re wondering how much to save each month, it’s helpful to start with the basics:

•   What do you expect your retirement expenses to be each month?

•   How much income will you have for retirement?

•   Where will this income come from?

It’s also important to consider how your retirement income needs may change over time and what circumstances might impact your financial plan.

Spending May Not Be as Low as You Think

Figuring out your monthly expenses is central to determining what is a good monthly retirement income. According to the Bureau of Labor Statistics, the typical household age 65 and older has annual expenditures of $72,967. That breaks down to monthly spending of about $6,080 per month. The largest monthly expense is typically housing, followed by transportation and food. If you’re planning to live frugally in retirement, spending, say, under $50,000 a year may sound achievable, but it’s not a realistic target for every couple.

For one thing, it’s all too easy to underestimate what you’ll spend in retirement if you’re not making a detailed budget. For another, inflation during retirement can cause your costs to rise even if your spending habits don’t change. That fact needs to be recognized and budgeted for.

Spending Doesn’t Stay Steady the Whole Time

It’s a common retirement mistake to assume spending will be fixed. In fact, the budget you start out with in retirement may not be sustainable years from now. As you get older and your needs or lifestyle change, your spending habits will follow suit. And spending tends not to be static from month to month even without events to throw things off.

You may need less monthly income over time as your costs decrease. Spending among older Americans has been found to be highest between ages 55 and 64 and then dip, according to Social Security reports.

It’s very possible, however, that your monthly income needs may increase instead. That could happen if one of you develops a serious illness or requires long-term care. According to Genworth Financial’s 2023 Cost of Care survey, the monthly median cost of long-term care in a nursing facility ranged from $8,669 for a semi-private room to $9,733 for a private room.

Expenses May Change When One of You Dies

The loss of a partner can affect your spending and how much income you’ll need each month. If you decide to downsize your home or move in with one of your adult children, for example, that could reduce the percentage of your budget that goes to housing. Or if your joint retirement goals included seeing the world, you may decide to spend more money on travel to fulfill that dream.

Creating a contingency retirement budget for each of you, along with your joint retirement budget, is an opportunity to anticipate how your spending needs might change.

Taxes and Medicare May Change in Your Lifetime

Taxes can take a bite out of your retirement income. Planning for taxes during your working years by saving in tax-advantaged accounts, such as a 401(k) or IRA, can help. But there’s no way to predict exactly what changes might take place in the tax code or how that might affect your income needs.

Changes to Medicare could also change what you’ll need for monthly income. Medicare is government-funded health insurance for seniors age 65 and older. This coverage is not free, however, as there are premiums and deductibles associated with different types of Medicare plans. These premiums and deductibles are adjusted each year, meaning your out-of-pocket costs could also increase.

Common Sources of Income in Retirement

Having more income streams in retirement means you and your spouse or partner are less reliant on any single one to pay the bills and cover your expenses. When projecting your retirement income pie-chart, it helps to know which income sources you’re able to include.

Social Security

Social Security benefits may be a central part of your income plans. According to the Social Security Administration (SSA), a retired worker received $1,845 in benefits and the average spouse of a retired worker netted $886 during the most recent year reviewed.

You can expect Social Security to cover some, but not all, of your retirement expenses. It’s also wise to consider the timing for taking Social Security benefits. Taking benefits before your full retirement age, 65 or 67 for most people, can reduce the amount you’re able to collect.

Retirement Savings

Retirement savings refers to money saved in tax-advantaged accounts, such as a 401(k), 403(b), 457 plan, or Thrift Savings Plan (TSP). Whether you and your partner have access to these plans can depend on where you’re employed. You can also save for retirement using an Individual Retirement Account (IRA).

Tax-advantaged accounts can work in your favor for retirement planning, since they yield tax breaks. In the case of a 401(k) plan, you can also benefit from employer matching contributions that can help you grow your savings faster.

Annuities

An annuity is a contract in which you agree to pay money to an annuity company in exchange for payments at a later date. An immediate annuity typically pays out money within a year of the contract’s purchase while deferred annuities may not begin making payments for several years.

Either way, an annuity can create guaranteed income for retirement. And you can set up an annuity to continue making payments to your spouse for the duration of their lifetime after you pass away.

Other Savings

The other savings category includes money you save in high-yield savings accounts, money market accounts, and certificate of deposit accounts (CDs). You could also include money held in a taxable brokerage account in this category. All of these accounts can help to supplement your retirement income, though they don’t offer the same tax advantages as a 401(k) or an IRA.

Pensions

A pension is an employer-based plan that pays out money to you based on your earnings and years of service. Employers can set up pension plans for employees and make contributions on their behalf. Once you retire, you can take money from your pension, typically either as a lump sum or a series of installment payments. Compared to 401(k) plans, pensions are less commonly offered, though you or your partner may have access to one, depending on where you’re employed.

Reverse Mortgages

A reverse mortgage can allow eligible homeowners to tap their home equity. A Home Equity Conversion Mortgage (HECM) is a special type of reverse mortgage that’s backed by the federal government.

If you qualify for a HECM, you can turn your equity into an income stream. No payment is due against the balance as long as you live in your home. If your spouse is listed as a co-borrower or an eligible non-borrower, they’d be able to stay in the home without having to pay the reverse mortgage balance after you die or permanently move to nursing care.

Reverse mortgages can be used to supplement retirement income, but it’s important to understand the downsides as well. Chief among those are:

•   Interest will accrue: As interest is applied to the loan balance, it can decrease the amount of equity in the home.

•   Upfront expenses: Funds obtained from the loan may be reduced by upfront costs, such as origination, closing, and servicing fees, as well as mortgage insurance premiums.

•   Impact on inheritance: An HECM can cause the borrower’s estate to lose value. That in turn can impact on the inheritance that heirs get.

How to Plan for Retirement as a Couple

Planning for retirement as a couple is an ongoing process that ideally begins decades before you’ll actually retire. Some of the most important steps in the planning process are:

•   Figuring out your target retirement savings number

•   Investing in tax-advantaged retirement accounts

•   Paying down debt (a debt payoff planner can help you track your progress)

•   Developing an estate plan

•   Deciding when you’ll retire

•   Planning for long-term care

You’ll also have to decide when to take Social Security benefits. Working with a financial advisor can help you to create a plan that’s tailored to your needs and goals.

Maximizing Social Security Benefits

Technically, you’re eligible to begin taking Social Security benefits at age 62. But doing so reduces the benefits you’ll receive. Meanwhile, delaying benefits past normal retirement age could increase your benefit amount.

For couples, it’s important to consider timing in order to maximize benefits. The Social Security Administration changed rules regarding spousal benefits in 2015. You can no longer file for spousal benefits and delay your own benefits, so it’s important to consider how that might affect your decision of when to take Social Security.

To get the highest benefit possible, you and your spouse would want to delay benefits until age 70. At this point, you’d be eligible to receive an amount that’s equal to 132% of your regular benefit. Whether this is feasible or not can depend on how much retirement income you’re able to draw from other sources.

Recommended: Does Net Worth Include Home Equity?

The Takeaway

To enjoy a secure retirement as a couple, you’ll need to create a detailed financial plan with room for various contingencies. First, determine your retirement expenses by projecting costs for housing, transportation, food, health care, and nonessentials like travel. Then consider all sources of retirement income, such as Social Security, retirement accounts, and pensions, and budget well.

If you want a simple way to track your progress, SoFi can help.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is the average retired couple income?

Figures vary. According to the Pension Rights Center, the median income for fully retired people aged 65 and older in 2023 was $24,190. The average income after taxes for older households in 2022 was $63,187 per year for those aged 65–74 and $47,928 per year for those aged 75 and older, according to US News Money.

What is a good retirement income for a married couple?

A good retirement income for a married couple is an amount that allows you to live the lifestyle you desire. Your retirement income should also be enough to last for your lifetime and your spouse’s.

How much does the average retired person live on per month?

According to the Bureau of Labor Statistics, the typical household age 65 and older has annual expenditures of $72,967. That breaks down to monthly spending of about $6,080 per month. Many factors, however, can impact a particular household’s spending and the amount of money they need to feel secure.

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Both health savings accounts (HSAs) and health reimbursement accounts (HRAs) offer tax-advantaged ways to save for future medical expenses. But they work in very different ways.

An HSA allows you to set aside money for healthcare costs that are not covered by your health insurance plan on a pre-tax basis. You must have a high-deductible health plan (HDHP) to open an HSA. With this option, you own the account and can take it with you if you leave your job.

An HRA, on the other hand, is a type of account that is owned by your employer. The company puts money into the account on your behalf, and you can use your HRA funds, tax-free, to cover qualified medical costs throughout the year. However, you can’t take the account with you if you leave your job.

If you’re looking for a way to reduce your healthcare costs, it’s a good idea to understand HSAs vs. HRAs. Then, provided you are eligible, you can decide which is the best option for you and your family. There is also a chance you can opt into both types of accounts.

Differences Between an HSA and HRA

HSAs and HRAs work differently than other types of ​​savings accounts. Here’s how these two types of accounts compare at a glance.

What Is an HSA?

A health savings account (HSA) allows employees and freelancers to put away funds pretax to be used for future medical expenses. There is one major requirement for an HSA: You must be enrolled in a high-deductible health plan (HDHP). For 2024, a HDHP is defined as having deductible of at least $1,600 for an individual and $3,200 for a family. In addition, the plan’s cap on yearly out-of-pocket expenses can’t exceed $8,050 for an individual or $16,100 for a family.

Your employer may offer an HDHP with an HSA as a workplace benefit. Or, if you enroll in health insurance through the private marketplace and choose an HDHP, you can typically open an HSA with a brokerage firm or other financial institution.

There are limits on how much you can contribute to an HSA. In 2024, those limits are:

•   Up to $4,150 to an HSA for self-only coverage

•   Up to $8,300 for family coverage

•   People age 55 and over can contribute an additional $1,000 annually

Unlike a flexible spending account (FSA), which also allows you to set aside a certain amount of money pretax for medical costs, the money in the HSA isn’t a “use it or lose it” proposition. The funds roll over every year, so there’s no rush to spend the money. In addition, you can take HSA with you should you leave your job.

You can use your HSA to directly pay for qualified medical expenses (typically using a debit card or via online payment), or you can collect receipts and reimburse yourself later. Any expense that is considered a deductible medical expense by the IRS qualifies. This includes doctor visits, prescription medications, dental and orthodontic treatments, lab tests, surgeries, hospital stays, hearing aids, and eyeglasses.

While an HSA is designed to cover immediate healthcare costs, many HSA providers allow you to invest a portion of your HSA funds in various investment vehicles, such as mutual funds, stocks, bonds, and exchange-traded funds (ETFs). These investments grow tax-free. You can access unused HSA funds during retirement for nonmedical expenses, but you will pay taxes on the funds.

Pros of an HSA

Here’s a look at some of the benefits of using an HSA.

•   Lowers your taxable income: Contributions are made with pretax dollars, often through payroll deductions by your employer. That means the money is not included in your gross income and is not subject to federal (and in most cases, state) income taxes.

•   Tax-free withdrawals: Withdrawals from your HSA are not subject to federal (and in most cases, state) taxes if you use them for qualified medical expenses.

•   Lower premiums: To qualify for an HSA, you must be enrolled in a HDHP, which means your monthly payments are likely lower than other types of health insurance plans.

•   Annual rollover: HSAs aren’t “use it or lose it.” You keep your money even if you don’t spend it in the year you contributed it.

•   Money can be invested and grow tax-free: Once you reach a required minimum balance (which can range from $500 and $3,000), you can choose to invest your HSA dollars.

•   Can boost retirement savings: After the age of 65, you can withdraw the funds for any purpose, not just qualified medical expenses. Using the funds this way makes them taxable, but does not carry a penalty.

•   You own the account: The money in an HSA is yours; you don’t forfeit it if you change jobs or are let go.

Cons of an HSA

There are also some potential disadvantages to HSAs. Here are some to consider.

•   Only allowed with a high-deductible health plan: If you don’t enroll in an HDHP, you can’t open an HSA.

•   Contribution limits: You can only contribute up to $4,150 for individual coverage and up to $8,300 for family coverage in one year.

•   May come with fees: Some HSAs charge maintenance fees, investment fees, paper statement fees, and per-transaction charges. It’s a good idea to ask for a complete schedule of fees before you choose an HSA.

•   Penalties for nonqualified expenses: If you withdraw money from your HSA to pay for anything other than qualified medical expenses before you turn 65, the withdrawal will be subject to taxes and a 20% penalty.

•   Limited investment options: You may have a limited choice of investment options within your HSA, which limits the potential returns you can earn.

•   Investments can lose money: Any investments you make with HSA funds could cause your balance to fall if the market drops.

•   Requires careful record keeping: It’s crucial to maintain accurate records of your expenses and HSA transactions for tax purposes. Keeping track of the transactions can be a chore.

Recommended: How Many Savings Accounts Should I Have?

What Is an HRA?

A health reimbursement account (HRA), sometimes referred to as a health reimbursement arrangement, is a job perk that some companies offer to workers to help make healthcare more affordable. The employer owns and funds the account. You do not need (nor are you allowed) to make any contributions to the account.

You can use the money in an HRA to pay for medical care you’d otherwise need to pay for out of pocket. The details, including how much is in the HRA and what type of medical expenses the funds can be used for, are determined by the employer.

In some cases, the HRA will reimburse the healthcare provider directly. In others, you might use a debit card associated with the HRA or pay for expenses out of pocket and then submit expenses and request reimbursement.

You are not taxed on the money your employer puts in your HRA, and you can withdraw the money for qualified medical expenses tax-free. However, you don’t own the account, can’t invest the money, and will lose the HRA if you leave your job (unless you choose COBRA continuing coverage).

In some cases, an employer might allow unused funds in an HRA to carry over from one year to the next, but they are not required to do so.

Pros of an HRA

Here’s a look at some of the key benefits of having an HRA.

•   Reduces your healthcare costs: You can withdraw money from the HRA to cover qualified medical expenses you’d otherwise have to pay for yourself. This may include deductibles, coinsurance, copayments, prescriptions, and more.

•   No high-deductible health plan requirement: You don’t need to enroll in a HDHP to have an HRA.

•   No contribution limits: There is no cap on how much money an employer can contribute to an HRA.

•   Some HRAs may cover insurance premiums: If you work for a small business that does not offer a group health plan, you may be able to use your HRA to purchase an individual health plan, as well as cover out-of-pocket expenses.

•   The HRA doesn’t count as income: Your employer’s contributions to an HRA do not count toward your gross income. And when you file a claim for a qualified medical expense, the reimbursement is tax-free.

•   Some HRA plans allow you to roll over unused funds to the next year. Your employer determines whether or not this option will be available.

Cons of an HRA

HRAs also have some downsides. Here are some to keep in mind.

•   You can’t contribute to an HRA: With this type of savings account, you are limited to whatever your employer contributes to the account.

•   Money in an HRA cannot be invested: This means that the funds will not grow over time.

•   You may lose the money if you don’t use it: In many cases, the money in the HRA must be spent the year it is contributed or you lose it. Employers can, but do not have to, allow some funds in your HRA to carry over to the next year.

•   You can’t take it with you. Your employer owns the account, and you lose your HRA money if you leave your job unless you elect COBRA coverage.

•   Inconsistent guidelines. HRAs are not standardized. As a result, an HRA offered by one company may have very different rules from an HRA offered at another company, which can lead to confusion.

•   Lack of availability. Not all companies offer HRAs. Also, self-employed people cannot participate in an HRA.

Which One Is Right for You?

When deciding if an HRA vs. HSA is better, the choice may be made for you. Many companies only offer one or the other. And if you’re self-employed, you won’t have access to an HRA.

If your employer offers both an HDHP and an HSA, as well as an HRA, you might be able to have both an HSA and an HRA. Generally, this is only possible if the employer’s HRA is limited in scope, such as one that only covers vision and dental expenses or just insurance premiums.

In this scenario, you may be able to contribute money into an HSA, where it can grow tax-free and potentially boost your retirement savings, while using the HRA to cover the cost of certain medical expenses. You can’t double dip, however, meaning you’re not allowed to get reimbursed by both accounts for the same expense.

In the end, whether to choose an HRA vs. an HSA will depend on which health saving plan (or plans) you are eligible to access and what type of health insurance you have.

The Takeaway

Health reimbursement accounts (HRAs) and health savings accounts (HSAs) can both reduce the cost of medical care that your health plan doesn’t cover, but they do so in different ways. The main difference between HRAs and HSAs is that you own and fund your HSA, while your employer owns and funds your HRA and can impose more limitations on it.
Whether your employer offers an HRA or an HSA, it’s a valuable workplace benefit. Both types of accounts help ensure you have funds you can tap to cover copays, high deductibles, and other out-of-pocket medical expenses.

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FAQ

Is it better to have an HRA or HSA?

It depends. Not everyone has access to a health reimbursement account (HRA); these accounts are created and funded by an employer as a workplace benefit. HRAs can cover a wide range of medical expenses, but funds are typically forfeited if you leave the company.

A health savings account (HSA), available with high-deductible health plans, allows you to contribute pretax dollars, grow the balance tax-free, and use the funds for qualified medical expenses. HSAs are portable and roll over annually.

The best option depends on your employment status, health insurance plan, and preference for control over the funds.

Can I use both an HRA and HSA?

Generally, having a health reimbursement account (HRA) disqualifies you from contributing to a health savings account (HSA). However, certain types of HRAs, such as limited-purpose HRAs, can be paired with an HSA. It’s essential to check with your employer and plan documents to understand the specific terms and ensure compliance with IRS guidelines.

Can I have an HSA if my husband has an HRA?

Not typically, but there are some exceptions. If you have a high-deductible health plan and your husband’s health reimbursement account (HRA) covers premiums-only or just certain types of medical expenses (such as only vision and dental), you may be eligible to contribute to a health saving account (HSA). You’ll want to verify the specific terms of the HRA to ensure compliance with HSA eligibility rules.

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