Retirement income sources
As you approach retirement, it’s important to consider potential income sources so you can develop a strategy for generating income that’s right for you.
If you’re like most people, one of your expected income sources in retirement is Social Security benefits . According to the Social Security Administration, the maximum benefit amount covers about 40% of an average retiree’s expenses.1 So you’ll likely need additional income in retirement.
Your employer’s retirement plan may be your most important source of income in retirement. Maximize the benefits by contributing as early as you can and regularly increasing the amount you save. Your employer may match a portion of the amount you contribute to your plan, so make sure you’re contributing at least enough to get the full match.
In the past, Medicare covered most retiree healthcare needs. Today, people are living longer and incurring more costs. 47% of current retirees say their healthcare expenses are already higher than expected, and costs are projected to rise 5.47% annually for the next 10 years.2 Medicare may cover part of your healthcare in retirement, but you also may need to explore other options.
A Health Savings Account (HSA) is a medical savings account that may be offered to people enrolled in high-deductible health plans. If available, money you’ve saved in an HSA can serve as an additional source of funds for healthcare expenses. These tax-advantaged savings may be most helpful if you wait to withdraw and use the money during retirement.
Other income sources
If you’re looking for additional ways to generate retirement income, consider the following options:
- Individual Retirement Account (IRA): Traditional or Roth contributions may offer you tax advantages while you save more for retirement.
- Part-time job: Retirement may be a great opportunity to pursue something you enjoy professionally. Maintaining a steady stream of income to cover daily needs allows your savings more time to grow.
- Advice from a financial professional: He or she may help you consider these and other options, and help you come up with a strategy that’s best for you.
Educate yourself about retirement income sources to gain more control over your income strategies and ensure that you’re as prepared as possible for retirement.