What is a good monthly retirement income in 2026?

Forty percent of adults worry they won't have enough money to last through retirement, according to recent data from the Pew Research Center. But how much is "enough"?

Retirees spent an average of $59,616 per year in 2025, according to the Bureau of Labor Statistics, or a little less than $5,000 a month. That's not enough for everyone — many experts recommend saving enough to have access to 70% to 80% of your current income.

To get a more specific idea of how much you'll need monthly in retirement, Vanguard senior financial analyst Sabino Vargas recommends creating a detailed budget, incorporating your current spending and saving habits, as well as expenses that may change in the future — like health care, travel and mortgage payments.

"Write it down on paper, or store it in an app," Vargas told CNBC. "It should be a living tool that can be updated and changed over time."

The free Empower app links to your investment accounts, tracks net worth and offers a retirement planner tool that analyzes portfolio risks and fee impact. Another top pick is You Need a Budget (YNAB). Its zero-based budgeting system assigns every dollar a "job," which can help free up cash for long-term savings goals

George Mannes, personal finance editor at AARP The Magazine, suggests taking your retirement budget "for a test drive."

"Do it while you're still working," he said. "See how it balances dining out, entertainment and other things so you know if it's something you could follow long term."

And, he adds, don't panic if you see a gap between your goal retirement income and what's in your nest egg.

"If you're five to ten years away from retirement, it's not too late," Mannes said. "There's still a lot of time to cut back on expenses and rejigger your lifestyle."

You may already have these income streams on your radar. But are you making the most of them? 

Retirement accounts

If your company offers a 401(k) plan, take advantage of any employer matching program. If you make $100,000 each year and contribute 6% of your pre-tax income, you'll have set aside $6,000 at the end of 12 months. If your company offers a 4% match, however, that's an extra $4,000 in "free" money.

If you have room in your budget to max out your 401(k) contributions, go for it. Workers 50 or older can add additional catch-up contributions, and if you're 60 to 63, you're eligible for "super" catch-up contributions.

An individual retirement account (IRA) isn't tied to your workplace, so you can keep making contributions after you change jobs. If you're new to saving, consider a traditional or Roth IRA with Fidelity. There's no minimum investment requirement and clients enjoy top-notch customer service and robust educational resources.

Charles Schwab offers some of the lowest rates in the industry and commission-free trading in stocks and ETFs. It also has an assortment of mutual funds with no transaction fees.

Social Security

According to Mannes, most people can count on Social Security to replace between 35% and 40% of their income. But that's assuming you wait until your full retirement age (FRA). For people born in 1960 or later, that's 67.

"You can begin taking Social Security at age 62, but if you do, you'll miss out on 35% to 40% of your benefits," said Mannes. "If you can't work or absolutely need the money, go ahead and take it. But one of the best things you can do is wait until your full retirement age — or even until you're 70."

If your FRA monthly benefit is $2,778, for example, waiting until 70 would boost that to $3,575. Starting at 62, though, will result in a monthly payment of just $1,822.

The Social Security Quick Calculator can give you a good idea of what claiming benefits early versus waiting until full retirement age (or later) will look like.

Investments and savings

Approximately 35% of Americans expect to rely on Social Security and their 401(k) as their primary retirement vehicles, according to the U.S. Census, but the median 401(k) balance for a 64-year-old is just $95,642.

Dividends from stocks, interest from bonds, CDs, rental property income and other investments are key to building a nest egg you can actually live on.

Annuities

Once commonplace, defined-benefit pensions are rare outside of government jobs. Only about 15% of private-sector workers have a pension, according to the Department of Labor Statistics.

If you're worried about outliving your retirement savings, an annuity can also offer guaranteed income for a set period or even for life. 

Health Savings Account

If you have a high-deductible medical plan, a Health Savings Account is a great way to cover Medicare premiums and other health care costs in retirement.

"You contribute money tax-free, it grows tax-free and you can use it on medical expenses tax-free," Mannes said. "It's one of the greatest deals you can get."

Unlike a Flexible Spending Account, HSA contributions roll over year after year and can grow indefinitely. And unlike a 401(k), an HSA doesn't have a required minimum distribution.

After age 65, the funds can also be used for non-medical expenses, in which case they're taxed as ordinary income.

Home equity

If you're at least 62 and have racked up substantial equity (or own your home outright)  you may be a good candidate for a reverse mortgage. A lender provides a lump sum, a series of payments or a line of credit and, so long as you live in the house, you don't have to pay anything.

The loan is due when you sell the house, stop using it as your primary residence or pass away.

There are risks, though: If you can't keep up with maintenance or make property tax and insurance payments, your lender can foreclose. Even if you do, you could be leaving your heirs with a sizable financial mess to sort out.

Downsizing

Selling your home and moving into a smaller or more affordable place is a common strategy, but it also has drawbacks. 

"Downsizing is tricky," Mannes said. "It costs a certain amount of money to move and it still costs a certain amount of money to keep the lights on. So you have to really do the math to see if it's worth it."

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice to help them make informed financial decisions. Every retirement article is based on rigorous reporting by our team of expert writers and editors. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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