Making Money in Retirement—What is Considered a Good Retirement Income?

Financial strategists generally plan withdrawals in two ways: protecting the principal or generating steady income from the market.

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The 25x Rule is a simple savings guideline that suggests building a nest egg equal to 25 times your yearly spending, while the 1,000-a-Month Rule focuses on income and suggests saving $300,000 for every $1,000 you want to receive each month in retirement.

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For households comparing their plans to benchmarks like average monthly retirement income, these rules offer a clearer way to estimate realistic results.

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The 4.7 Percent Rule is a 2026 update to research originally done by William Bengen, increasing the traditional safe withdrawal rate from 4% after reviewing how balanced investment portfolios have performed historically. For a $2.67 million HNW portfolio, that extra 0.7% means about $18,690 more in yearly income—almost enough to cover the yearly Medicare premiums and deductibles for a high-income couple.

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The commonly used “80% Replacement Rule” assumes people spend less after they stop working, but 48% of HNW retirees say they expect their spending to stay the same or even rise as they maintain their lifestyle during periods of higher inflation.

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Because of that, many HNW retirees now aim to replace 100% of their previous income so they can stay active, travel, and enjoy retirement without worrying about losing purchasing power over time.

In California, what counts as a “good” retirement income is heavily influenced by the state’s high cost of living, which remains about 42% higher than the national average.

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Costs also vary widely across the state, with places like San Francisco and San Jose ranking among the most expensive areas, while cities like Bakersfield offer one of the few places where the cost of living is actually about 1.4% below the national median.

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Because of this variation, comparing local needs with national average retirement income can sometimes underestimate what residents really need to maintain the same lifestyle.

Retirement is becoming increasingly active, with about 50% of Gen X and 41% of Americans now planning to continue working in some form during their retirement years.

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Interestingly, financial need is not always the primary motivation—56% say their biggest reason is simply wanting to feel useful and stay mentally engaged. Though, for many retirees, continuing to work can also help bridge the gap between how much the average American needs to retire and their own personal income goals.

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For HNW individuals, small but well-paid “microgigs” or part-time leadership roles can also act as a practical buffer against inflation while helping manage taxes more strategically. These additional income streams can also help cover healthcare costs such as the 2026 Medicare Part B monthly premium of $202.90, the Part B annual deductible of $283, and the Part A deductible of $1,736.

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By earning some active income, retirees may be able to leave their core investments untouched longer while also managing their tax brackets with greater precision.

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However you hope to make money in retirement, make sure to adjust your strategy year by year to account for healthcare costs, inflation, and regulatory changes. That will help remove guesswork and avoid unexpected financial setbacks that could threaten long-term stability.