Key Takeaways
- At age 65, the average Social Security payment is $1,607 per month.
- The average 401(k) balance for people aged 65 to 69 is $252,800—providing about $800 per month to spend under the 4% rule.
- With an average of about $2,400 per month from Social Security and 401(k) savings combined, many retirees may face financial challenges without additional support or income, particularly in higher-cost areas.
- Options like downsizing, relocating, part-time work, and reverse mortgages can help stretch limited resources.
At age 65, many retirees rely on a combination of Social Security benefits and retirement savings to make ends meet, with the average Social Security payment at $1,607 per month. While Social Security provides a safety net, it was never designed to fully replace income, and for most, it falls short of covering basic living expenses.
This leaves retirees needing to stretch limited resources, plan carefully, and often make tough financial decisions to navigate retirement comfortably. Here’s how much the average 65-year-old receives in Social Security benefits—and what the average retiree should know as a result.
How Much Does the Average Person Receive in Social Security at 65?
The average Social Security benefit for men is higher, at $1,772, and for women, it’s lower, at $1,457.
Americans aren’t eligible for full Social Security retirement benefits at age 65. Though you can start receiving them as early as age 62, the benefits will be reduced by a small percentage each month before your full retirement age, which is 67 for people born in 1960 and later. As a result, the average monthly benefit for a retired worker is higher, at $2,071. At age 65, your benefits is reduced to about 87% of the full amount.
These numbers mean most retirees need to supplement their Social Security benefits with income from their retirement savings, says Scott McClatchey, a senior wealth advisor at South Carolina-based Ballast Rock Private Wealth. “There just won’t be enough available to pay bills and live a comfortable, typical span retirement,” he adds. “It’s grim.”
Average 401(k) Balance at 65
Hopefully, your account balance has grown as you have saved through the years. So, how much does the average 65-year-old have in their retirement account? According to Fidelity, the average 401(k) balance for people ages 65 to 69 is $252,800. If you’re following the 4% rule for withdrawals, you’d have about $10,100 available for your first year of retirement, or roughly $800 per month.
What Does This Mean for You?
With about $2,400 to spend monthly from their 401(k) and Social Security benefits, “the average retiree is not in especially strong shape,” says Justin Pritchard, a Certified Financial Planner at Colorado-based Approach Financial. “That said, there are people who can live on that: They typically live in lower-cost areas, and as long as life doesn’t throw them any curveballs, they can meet their needs,” he adds.
For areas with a higher cost of living, however, it’s a tougher call. “These averages highlight the challenges many retirees face,” says Daniel E. Milks, a managing partner at Fiduciary Organization.
“Social Security was never meant to fully replace income in retirement; it’s designed as a safety net,” he says, adding: “Unfortunately, many retirees end up relying on it as their primary or sole income source, which can lead to financial strain.”
Milks offers some options for an average retiree facing financial difficulties. The key consideration, he says, is learning how to stretch these limited resources by taking a “hard look” at their monthly expenses, particularly housing and healthcare, which are often the largest portion of a retiree’s budget. Some retirees might consider downsizing or relocating to an area with a lower cost of living.
Tip
Another option is choosing to delay claiming Social Security benefits until the age of 70, when you can lock in the maximum benefit thanks to delayed retirement credits.
Alternatively, people can consider options to manage income during retirement—such as taking on a part-time job, depending on their ability to do so, and a reverse mortgage, among others.
The Bottom Line
At 65, the average Social Security benefit and a modest 401(k) savings leave many retirees in a precarious financial position. While some can make ends meet in lower-cost areas, others may face tough decisions like cutting expenses, downsizing, or finding additional income sources.
Ultimately, as Milks notes, “Planning early and often is the best way to avoid falling into this average, and for those already retired, making smart spending decisions and maximizing benefits is key.”
