How Will You Pay For Retirement?

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Discover effective strategies for retirement income planning. Explore safe money alternatives to secure your financial future. Learn more at SafeMoney.com. It’s not unusual for retirees to have multiple sources of income. According to the Social Security Administration, people age 65 and older receive a majority of their income from four sources. These source-points cover a wide range of income needs, from monthly living costs to healthcare spending and other retirement expenses. If you’re in or near the “retirement red zone” (a period of 10 years before retirement and the first 10 years in retirement), now is a critical time. Decisions made now – and decisions which are neglected – will have a significant impact on the rest of a retirement lifetime, no matter how long it lasts. It’s a stage at which to figure out how you will pay for all of your retirement years. With that said, here’s a look at how people age 65 and older are paying for retirement, and some ways to maximize retirement income. Important Retirement Income Sources Social Security . A majority of retirees receive Social Security payments. The Social Security Administration reports that for 52% of Americans age 65 and over, Social Security makes up at least half of their income. Around 25% use Social Security for 90% or more of their income. Your Social Security payments are based largely on the 35 years of employment in which you received the most income. One of the biggest factors in how much you will receive in Social Security payments is your age when you file. You can sign up at age 62. But if you file before your full retirement age (for many retirees, this is age 66 or 67), you will get a permanent reduction in monthly payouts. However, it pays off if you wait. Your benefit increases nearly 8% for each year you delay signing up. If you wait until age 70, you will fully maximize your benefit. Workplace retirement accounts. 401(k) plans, defined-benefit pensions, and other workplace retirement benefits provide income for 44% of retirees. Workplace-sponsored retirement accounts also make up 21% of total income for Americans age 65 and up. A retirement pension gives the security of a guaranteed income stream. But many corporations and other organizations are dumping their pension obligations due to fi