The four main sources of retirement income
Once you’ve retired, your income will probably come from one or more of four sources:
- Pensions - This employer-provided benefit may not provide all you need. Did you know only 21% of private-sector, state and local government workers participate in a pension plan?1
- Personal savings – Think about how much you’ll need to save in order to live the retirement you imagine
- Employer retirement plan - These plans allow you to defer contributions from your paycheck to a supplemental retirement account (e.g. your 401(k), 457(b), 401(a) or 403(b)) and are quickly becoming the largest form of retirement income
- Social Security - According to the Social Security Administration, Social Security benefits typically account for (at most) 40% of what you earn now2
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2 Better Information on Income Replacement Rates Needed to Help Workers Plan for Retirement, Government Accountability Office (March 2016); Understanding The Benefits, Social Security Administration (July 2017). Calculated as amount of pre-retirement income GAO says an average person needs in retirement less the amount of income SSA says Social Security replaces, on average.