What Are the Available Sources of Retirement Income?
When you retire and your earning power ceases, you will have to depend on three primary sources for your retirement income:
- According to the Social Security Administration, the average retired worker in 2015 receives an estimated $1,328 monthly benefit, about 40% of average preretirement income. As pre-retirement income increases, however, the percentage replaced by Social Security declines.
Employer Sponsored Plans and IRAs
- You may be eligible to participate in a retirement plan established by your employer and receive pension income at your retirement. You may also be able to contribute to an individual retirement account (IRA) to supplement Social Security and pension benefits.
Home Ownership and Personal Retirement
- For many people, there is a gap between the retirement income they can expect from Social Security and employer-sponsored plans/IRAs and their retirement income objectives. Home equity can be used to bolster retirement security.
- Personal retirement savings, including bank and brokerage accounts and insurance and annuity contracts, can be used to bridge a retirement income gap.
If sufficient retirement income is not available, will you defer your retirement age, or will you choose to reduce your standard of living?