Which States Have The Highest And Lowest Average Monthly Retirement Income

Although some retirees have pensions and retirement account savings, Social Security serves as the main income source for many people during their golden years. Whether that's enough depends on their debts, preferred lifestyle, healthcare requirements, cost of living where they reside, and other factors unique to them. Whether their state requires or exempts taxation on Social Security checks also plays a role in determining their spendable income. 

Plus, the annual average household retirement income available to cover those expenses can vary by where someone lives. Using data from the U.S. Census Bureau's American Community Survey, wisevoter calculated the 2022 average as $27,617, a little more than $2,300 per month. Alaska topped the list of states with the highest retirement incomes, with an average household retirement income of $36,023. It was also categorized as one of the most tax-friendly states with no tax on pensions or military pensions. Meanwhile, the state with the lowest average retirement income was Indiana at $20,542. Notably, it taxes pensions though not military pensions.

A SmartAsset 2024 study fueled by U.S. Census Bureau data demonstrates how average retirement incomes aren't equal around a state. After analyzing data for the country's largest 345 cities, SmartAsset found that Ann Arbor, Michigan, came out on top — no wonder it's one of the best places for retirees to move. Retirees there average an income of $30,428 annually — more than $6,000 higher than the state's average. Curiously, despite the fact that Indiana ranks as the lowest state in retirement income, Carmel, Indiana, is the only city besides Ann Arbor that showed an average Social Security income higher than $30,000. Averaging $30,069, Carmel residents exceed their state's average by nearly $10,000 annually. 

One potential explanation for these differences is pre-retirement income. The more you make while working, the larger your Social Security payments will be. Carmel is considered one of the wealthier cities in Indiana, so it stands to reason that it would have a higher retirement income than other Indiana towns. That principle also applies to income from additional retirement savings accounts. People who have more expendable income while they're working might contribute more to an IRA or 401(k), preemptively bolstering their retirement payouts so they won't have to find other ways to make money after retiring.