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Retirement Reality Check: Millions face Shortfall Between Savings and Monthly Expenses
Washington D.C. - A growing number of Americans are facing a stark reality: their retirement savings are unlikely to cover typical monthly expenses, even wiht Social Security benefits. New analysis reveals a significant gap between accumulated wealth and the funds needed to maintain a cozy lifestyle in retirement, prompting financial experts to urge proactive planning and adjustments.
The average retired household in the United States currently spends approximately $5,000 per month on necessities like housing, healthcare, food, transportation, and discretionary spending. However, many are falling short of this benchmark. With the median 401(k) balance for individuals aged 60 to 69 at $210,724, utilizing the commonly cited 4% withdrawal rule generates roughly $702 per month. When combined with the average monthly Social Security benefit of $1,976, the total still doesn’t meet typical expenditure needs.
if your retirement projections indicate a shortfall, there are actionable steps to take. For 2025, the IRS allows individuals ages 50 and older to contribute up to $31,000 annually to their 401(k). individuals can also contribute $7,000 (or more in certain circumstances) to conventional or Roth individual retirement accounts (IRAs). Delaying the start of Social Security benefits can also significantly increase monthly income; benefits increase by 8% for each year claiming is postponed past full retirement age, up to age 70.
Beyond increasing income, evaluating and potentially decreasing retirement spending is crucial. Carefully consider anticipated expenses in your post-career period and identify areas where costs can be reduced.
