Is $20,000 a Month in Retirement Income Within Reach?

Median retirement income is $56,680 for U.S. households 65 and over, while the mean retirement income is $87,260. While many retirees are satisfied with that amount, some hope for more, and ideally much more.

An income of $20,000 per month could provide seniors with $240,000 per year, which would likely be more than enough to cover healthcare costs and enjoy hobbies or travel. But is achieving a $240,000 retirement income feasible for most people?

Here’s what you’d likely need to do to make it happen.

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You’d need this much saved to generate $20,000 per month in retirement income

If you want distributions from your retirement plans to generate $20,000 per month in income, you’re going to need a substantial amount saved.

You’ll want to make sure you’re maintaining a safe withdrawal rate to avoid draining your account and ending up broke later in life. Traditionally, experts recommended following the 4% rule to have a good chance of preserving your nest egg.

While lengthening lifespans and pessimistic projections of future returns have some people concerned that the 4% rule may not be quite conservative enough, it’s still a good starting point for estimating your retirement savings needs.

Based on that 4% rule, if you want $20,000 per month in retirement income, you would need $6 million invested in your 401(k), IRA, or other tax-advantaged or taxable investment accounts.

How can you save enough to collect $20,000 in income in retirement?

Obviously, a $6 million nest egg is far more than many people retire with. But if you’re used to earning a higher income or really want to ensure you are financially secure as a senior, you’ll need to commit to investing a lot of money over your working life to hit your $20,000-per-month retirement income goal.

The specific amount you’ll need will vary depending on when you start saving. Assuming you earn a 10% average annual return and want to retire at 67, the table below shows the monthly amount that you’d need to invest to end up with $6 million.

Table calculations by author.

These amounts are doable if you start young and are a high earner. Investing $18,168 per year at 30 should be possible if you’re making $100,000 or even a bit less — and a 401(k) with an employer match can help you get to your target number.

Of course, the longer you wait and the less you earn, the harder it becomes to achieve this goal. If this is something you’re committed to, make sure you’re setting yourself up to earn a good income. And start investing as soon as possible, take advantage of tax breaks for retirement, and automate your investment contributions to give yourself the best chance of success.