What comes to mind when you think about your retirement? Travel? Spending time with family? A new hobby? Whatever you envision, one thing is for certain. You'll need a steady income to support it.

 

Unlike during your working years, you may not be earning a paycheck. That's why it's so important to plan ahead. 

 

Here is a breakdown of common retirement income sources:

 

1. Social Security

Social Security provides monthly payments based on your earnings history.  You can start receiving benefits at age 62-70 years old, but waiting longer increases your benefit. It is meant to supplement your income, not replace it fully. You may expect to receive 40% of your income.

Tip: Check your estimated benefit at ssa.gov.

 

2. Employer-Sponsored Retirement Plans, 401(k)

Many employers offer retirement savings plans, such as a 401(k). These accounts let you invest pre-tax dollars. Many employers will match a portion of your contributions. At the age of 73 (as of 2025), you must begin taking required minimum distributions (RMDs). Withdrawls are taxed as regular income.

 

3. IRAs (Traditional & Roth)

Traditional  IRAs are tax-deferred and require RMDs starting at 73 (as of 2025). Roth IRAs are funded with after-tax dollars, but allow tax-free withdrawls in retirement. Roth IRAs do not have RMDs and are great if you expect to be in a higher tax bracket later.

Tip: Diversifying with both Traditional and Roth accounts can give you more tax flexibility in retirement.

 

4. Pensions

Though less common today, some employers still offer pensions. Pensions are guaranteed monthly payments for life, after a certain number of years working with a company. They are usually calculated based on salary and years worked. You may have an option between a lump-sum and monthly payments.

 

5. Annuities

Annuities are insurance products that convert a lump sum in to a stream of income, for a set period or for life. Annuities can provide guaranteed income in retirement. There are many types: immediate, deferred, fixed, and variable. 

 

6. Personal Savings & Investments

This category includes your checking and savings accounts, brokerage accounts, real estate, and other investments, that are not held in a retirement account. These funds are more flexible and are not subject to RMDs. Taxes depend on the type of asset (capital gains, interest, etc.)

Tip: Consider planning a withdrawl strategy to minimize taxes and make your money last.

 

7. Part-Time Work or Business Income

Many retirees supplement their income by working part-time or by starting a small business. This can also help you delay withdrawls from retirement accounts.

Tip: This may impact your Social Security benefits if you claim before full retirement age.

 

A strong retirement plan doesn't rely on one income source

Blend several retirement sources to create stability and flexibility. The earlier you begin planning, the more options you will have! It's never too early, or late, to start planning!