Sources of Retirement Income 101
If you’re like most working adults, you have only one source of income – your job. While one source of income is fine for working adults, it is not feasible in retirement. Retirees rely on multiple sources of retirement income to replace their salaries. If you’re new to retirement planning or want to learn about retirement income sources, keep reading.
Sources of Retirement Income Categories
Retirement income sources range from small to large. As for other investments, it is important to diversify your sources of retirement income for optimal returns. But first, you need to identify income sources. The simplest way to determine retirement income sources is to think of your assets as belonging to one of a few buckets. Breaking down your income into buckets will help you match your income to expenses and make sure that critical needs are satisfied. Income buckets will also create a big-picture overview of what is required to generate lasting retirement income. So, gather your assets and mark them by category.
Category 1: Pre-Tax Assets
Investment contribution made before taxes are deducted.
- 401(k) or 403(b) Employer Plan
- Lump-Sum Pension Payouts
- Rollover IRAs
Category 2: Tax-Free Retirement Assets
Investments that are exempt from taxes on income earned.
- Roth 401(k) Employer Plans
- Roth IRA
Category 3: Non-Qualified Assets
Investments that don’t qualify for tax deferment or exemption.
- Savings Bonds
- Brokerage Account
- Mutual Fund Account
- Excess Savings
Automatic Sources of Retirement Income
You’re probably wondering, “What sources of automatic retirement income will I have?” Well, there are seven types of automatic retirement income:
- Social Security income (refer to Social Security section to calculate the benefit)
- Spouse’s Social Security income (refer to Social Security section to calculate the benefit)
- Employer pension plans
- Spouse’s employer pension plan
- Rental income
- Non-qualified dividend income
- Part-time work or business income
Retirement Income Planning Made Simple
Ready to start retirement income planning? If so, use our investment tools to help you identify and analyze all of your potential sources of retirement income. Start planning today!