The 6 Most Common Retirement Income Sources

[tryan]

Interesting 6 .... I haven't touched 1,2, or 3. Living off 6 (rents) and letting the property manager do the heavy lifting. Got a letter from SSA saying I can collect early starting this november. Why bother ? I already PAY taxes each year .... I would just be giving it back.

 

[MichaelL]

I consider the term "personal retirement accounts" to mean tax deffered such as 401k, IRA, etc. I have personal savings and brokerage accounts that are not tax deffered and I accumulate dividends and interest from them.

 

[jazz4cash]

See this cautionary tale...



https://www.bogleheads.org/forum/viewtopic.php?p=7416395#p7416395

I was expecting something more “dire”. I tend to agree dealing with a variety of MYGA issuers is likely to involve a variety of procedures and results. I’ve had a taste of it too but only with regard to early withdrawals just like the Boglehead example. . This is not at all unlike my experience dealing with a variety of credit unions, especially wrt IRA transfers.

 

[Midpack]

I consider the term "personal retirement accounts" to mean tax deffered such as 401k, IRA, etc. I have personal savings and brokerage accounts that are not tax deffered and I accumulate dividends and interest from them.

I can understand how some might think that, but it's apparent from the article they are including all accounts, taxable-tax deferred-tax free. And if that wasn't true, how could taxable assets be no part of retirement income? Less than 7% rental income seems highly unlikely.

 

[lucky penny]

I consider the term "personal retirement accounts" to mean tax deffered such as 401k, IRA, etc. I have personal savings and brokerage accounts that are not tax deffered and I accumulate dividends and interest from them.

In the video posted by OP the speaker states that for purposes of these stats, "personal retirement accounts" includes any savings, including brokerage accounts.

Many of us who track our assets create separate categories for various kinds of savings, tax-deferred and otherwise.

 

[Major Tom]

#2 (Personal Retirement Accounts) and, when I'm old enough, #1 (Social Security) for me.

Due to my comfort with a fairly low material quality of life, the income from my personal retirement accounts will be enough to sustain me for the rest of my life. When SS comes along, it will all be icing on top of the cake. I'll feel as if I'm living high on the hog. I can't wait! That's one benefit of being frugal. When still trying to decide whether to retire early, I was very pleasantly surprised at how much SS I was going to get with relatively few earning years, and so many years of earning zero from the onset of my retirement to the start of SS. SS is indeed weighted quite heavily in favor of lower earners.

 

[MichaelL]

I can understand how some might think that, but it's apparent from the article they are including all accounts, taxable-tax deferred-tax free. And if that wasn't true, how could taxable assets be no part of retirement income?

Something can be part of retirement income without being a retirement account. Most people don't have savings outside of retirement accounts. If I have a regular savings account or broker account it isn't a retirement account. It just an account.

 

[Gumby]

Something can be part of retirement income without being a retirement account. Most people don't have savings outside of retirement accounts. If I have a regular savings account or broker account it isn't a retirement account. It just an account.

An account which can be used to pay expenses in retirement. Why overcomplicate this? My 3 legged stool is the traditional Social Security, pensions and personal savings. The type of account holding the personal savings is irrelevant except for the tax treatment.

 

[G-Man]

An account which can be used to pay expenses in retirement. Why overcomplicate this? My 3 legged stool is the traditional Social Security, pensions and personal savings. The type of account holding the personal savings is irrelevant except for the tax treatment.

Same here. My wife and I both have 3 legged stools.

 

[OnTheBeach]

Personal savings and don't plan to rely on Social Security

 

[MichaelL]

An account which can be used to pay expenses in retirement. Why overcomplicate this? My 3 legged stool is the traditional Social Security, pensions and personal savings. The type of account holding the personal savings is irrelevant except for the tax treatment.

The type of account holding the savings is relevant as an indicator of how much money people saved beyond the limited 401k deductions as people with high value non tax defered accounts earned much more than they spent.

 

[Midpack]

Something can be part of retirement income without being a retirement account. Most people don't have savings outside of retirement accounts. If I have a regular savings account or broker account it isn't a retirement account. It just an account.

Actually 3 in 5 do have savings, though how much $ probably varies considerably. An even higher percentage on this forum probably do.

Beyond that why pic nits? If you have savings and you’re retired you won’t spend that money? The article acknowledges in several places its all assets, not just 401k’s and IRAs.

Lots of sources, just one…

The survey found that about 37% of retirees say they have no retirement savings, up from 30% in 2022, and only about 12% have at least the recommended $555,000 in savings.

 

[MichaelL]

That yahoo!finance survey indicates that 88% of people have no savings to just a little savings.

Breaking out how much income is coming from personal savings indicates how much people have beyond tax defered accounts so it's interesting to know.

 

[MichaelL]

Beyond that why pic nits? If you have savings and you’re retired you won’t spend that money?

If the money isn't in a restricted retirement account like a 401k and the person isn't yet retired they could spend the money before retirement.

 

[F.I.R.E User]

Are Pensions being offered now for any companies?

 

[Midpack]

That yahoo!finance survey indicates that 88% of people have no savings to just a little savings.

Breaking out how much income is coming from personal savings indicates how much people have beyond tax defered accounts so it's interesting to know.

Nope. https://finance.yahoo.com/news/much-retirees-actually-savings-hint-160009167.html

If the money isn't in a restricted retirement account like a 401k and the person isn't yet retired they could spend the money before retirement.

We’re talking about retirees with savings, not sure what question you’re answering but knock yourself out.

 

[Gumby]

If the money isn't in a restricted retirement account like a 401k and the person isn't yet retired they could spend the money before retirement.

In many cases, you could spend your 401k before retirement too by taking loans against it. I find it simpler to just count all the money you have accumulated anywhere, regardless of type of account or the assets held (CDs, mutual funds, individual stocks, bonds, etc.), as money available for retirement that is separate from pensions or social security. And it doesn't matter whether you are selling stock and taking the proceeds, getting dividends, interest or whatever.

 

[harley]

1, 2 5, 6 for us.
1 - Just started DW's SS, mine will wait for 70 (3 more years).
2 - We haven't drawn anything from our IRAs, except for Roth conversions. But we're pretty much out of pre-tax now, so that may start, depending on
5 - small side gig that has turned out to be much more lucrative than ever expected, and
6 - A couple of rental properties that have also done pretty well for us.

Rethinking my answer, I have to add #4 to the list. We have a couple of Variable Annuities that we got put into back in the old financial advisor days. I had pretty much forgotten about them, as I'm not sure what to do with them. I count them in our net worth, but otherwise consider them to be savings accounts that we don't need to or even know how to draw down from. I guess they'll sit there forever until we pass, and DD will have to liquidate them.

So I guess we have a nice, stable 5-legged stool.

 

[jazz4cash]

In many cases, you could spend your 401k before retirement too by taking loans against it.

Only if your 401k balance is small. I think the limit is 1/2 of your account balance or $50k. Subsequent loans are likewise limited.

 

[NW-Bound]

If the money isn't in a restricted retirement account like a 401k and the person isn't yet retired they could spend the money before retirement.

The distinction is perhaps more useful for people still working, and not yet eligible to withdraw from their retirement accounts with no penalty.

Yes, it's common wisdom that people should have some after-tax savings which they can tap in case of needs such as job loss or major purchases, instead of paying penalty to tap their retirement accounts.

Once you are retired and over 59-1/2, the difference is now mainly the tax liability between different accounts. Other than that, everything is reachable and spendable.

Well, that tax liability difference may not be a minor thing, as we have constant threads about RMD, Roth conversion, IRMAA, etc... It's never simple.