When you hear someone say they’re living on their pension, what do you picture? A comfortable life? A tight budget? The truth is, the average pension payout varies wildly depending on where you live, what kind of job you had, and when you retired. There’s no single number that tells the whole story - but there are real numbers you can use to plan for your own future.

How much do most people actually get?

In the United States, the average monthly Social Security benefit in 2025 is $1,907. That’s up from $1,847 in 2024, thanks to a 2.5% cost-of-living adjustment. But here’s the catch: that’s just Social Security. It’s not the same as a company pension, and it’s not designed to be your only source of income in retirement.

For people who worked in jobs that offered traditional defined benefit pensions - like teachers, police officers, or union workers - the average monthly payout is around $3,100. That number comes from the Pension Benefit Guaranty Corporation, which tracks private-sector pensions. But here’s the reality: fewer than 15% of private-sector workers still have access to those kinds of plans. Most people now rely on 401(k)s, IRAs, or other defined contribution accounts.

When you combine Social Security with other retirement savings, the median total monthly income for retirees aged 65 and older is about $3,500. That means half of retirees get less than that. And if you’re living in a high-cost city like San Francisco or New York, $3,500 won’t stretch far.

What’s the difference between Social Security and a pension?

Many people use the words "pension" and "Social Security" interchangeably, but they’re not the same thing. Social Security is a federal program funded by payroll taxes. Everyone who worked and paid into it for at least 10 years gets some amount when they retire. The amount depends on your earnings history, when you start claiming, and your birth year.

A traditional pension, on the other hand, is a benefit paid by an employer. It’s usually based on your salary and how long you worked there. For example, if you spent 30 years as a city firefighter earning $75,000 a year, your pension might be 60% of that - or $45,000 per year, which breaks down to $3,750 a month.

Here’s the big shift: in 1980, about 35% of private-sector workers had a defined benefit pension. By 2025, that number is down to 12%. Most new hires today get a 401(k) match instead. That means you’re responsible for saving, investing, and managing your own retirement income.

How much should you save to match the average?

If you want to replace about 70-80% of your pre-retirement income - which most financial planners say is enough to maintain your lifestyle - you need to think ahead. Let’s say you earn $60,000 a year. You’d need about $42,000 to $48,000 per year in retirement.

Now, if you’re getting the average Social Security check of $1,907 a month ($22,884 a year), you still need to cover another $19,000 to $25,000 annually from your own savings. That means you’ll need a retirement account with at least $500,000 to $650,000, assuming you withdraw 4% per year.

But here’s where things get tricky: not everyone saves that much. The median retirement account balance for people aged 55-64 is just $107,000. That’s not nearly enough to cover the gap. So if you’re relying on the "average" pension payout, you’re probably underestimating what you’ll need.

State pensions and public sector differences

If you worked for a state or local government, your pension might be better than the national average. For example, in California, the average monthly pension for public employees is $4,200. In New York, it’s $3,800. In Texas, it’s closer to $2,900. These numbers vary because of funding levels, union negotiations, and how long employees typically stay on the job.

Teachers, firefighters, and police officers often retire after 25-30 years with pensions that replace 70-80% of their final salary. But even here, there’s a growing problem: many state pension funds are underfunded. That means future retirees might get less than promised - or face higher taxes to make up the difference.

What about private pensions and 401(k)s?

Most private-sector retirees don’t have pensions anymore. Instead, they have 401(k)s. The average 401(k) balance for people aged 60-69 is $218,000. That sounds like a lot - until you realize that’s only enough to generate about $8,700 a year at a 4% withdrawal rate. Add that to Social Security, and you’re at $31,500 a year. That’s below the median income for retirees.

Why? Because most people don’t save enough. The average employee contributes just 6% of their salary to a 401(k), and many employers match only 3-4%. That’s not enough to build a large enough nest egg. If you’re in your 30s or 40s and haven’t started saving aggressively, you’re playing catch-up.

How inflation and taxes affect your payout

Even if you have a fixed pension, inflation eats away at its value over time. A $3,000 monthly pension in 2005 is worth about $2,100 in today’s dollars after accounting for inflation. That’s why cost-of-living adjustments (COLAs) matter. Social Security gives them - but most private pensions don’t. If yours doesn’t, your buying power drops every year.

Taxes also change the game. Social Security benefits may be taxed if your total income exceeds $25,000 (single) or $32,000 (married). That means your $1,907 check might only land as $1,700 in your bank account. Private pensions are usually fully taxable as ordinary income. So the number you see on your statement isn’t the number you get to spend.

What does this mean for your plan?

If you’re close to retirement and haven’t saved much, your best move is to delay claiming Social Security. Every year you wait past 62 (up to age 70) increases your monthly benefit by 8%. That’s a guaranteed return you won’t find anywhere else.

If you’re still working, max out your 401(k) or IRA. Contribute at least 15% of your income - and increase it every time you get a raise. Use catch-up contributions if you’re over 50. And if your employer offers a match, don’t leave free money on the table.

Don’t assume the average pension payout will be yours. The average is just a number - it doesn’t reflect your personal situation. Your retirement income depends on your choices, your savings, and your timing.

What’s the bottom line?

The average pension payout in the U.S. isn’t a safety net - it’s a starting point. For most people, it’s only part of the picture. You need to save more than you think. You need to plan for taxes and inflation. And you need to understand that the days of guaranteed lifetime income from your employer are mostly gone.

There’s no magic number that works for everyone. But if you’re aiming to retire comfortably, you should plan for at least $4,000 a month in combined income - and be ready to cover the rest yourself.

If you’re still working, start now. Even small increases in your savings rate can make a big difference over time. Don’t wait for the average to be enough - build your own security.