Are You on Track to a Reliable Retirement?
Planning for retirement is a journey that involves understanding where your income will come from and ensuring it aligns with your future needs. While workers often expect certain sources of income, retirees sometimes experience a very different reality. Let’s explore six key sources of retirement income to help you assess if you’re on track for a reliable and secure retirement.
Social Security
Social Security remains a cornerstone of retirement income for many. To qualify, workers must pay Social Security taxes for at least 10 years. Benefits are calculated based on your 35 highest-earning years, with gaps filled in as zero. For 2023, the average monthly benefit is around $1,827. While it can provide essential support, relying solely on Social Security may not be sufficient for a comfortable retirement.
Personal Savings and Investments
Beyond employer-sponsored plans, personal savings and investments play a critical role. From stocks to bonds or even income-generating real estate, these assets can help bridge the gap between Social Security and your retirement needs. Diversifying your investments and ensuring a portion offers consistent income can create stability in your retirement years.
Individual Retirement Accounts (IRAs)
Traditional and Roth IRAs provide opportunities for tax-advantaged retirement savings. Traditional IRAs offer tax-deductible contributions (subject to eligibility) and require minimum distributions starting at age 73. Roth IRAs, while funded with post-tax dollars, allow for tax-free withdrawals if certain conditions are met. Understanding the differences and how they fit into your strategy is key to maximizing your retirement income.
Defined Contribution and Benefit Plans
Employer-sponsored plans, such as 401(k)s or pensions, can offer reliable income streams. A 401(k) allows employees to save pre-tax dollars that grow tax-deferred, with required minimum distributions starting at age 73. Traditional pensions, though less common today, provide defined benefits based on employment history and salary. These plans often serve as a foundational income source for retirees.
Continued Employment
For many, retirement doesn’t mean the end of earning potential. Over 70% of workers plan to continue some form of work in retirement, though only 23% of retirees report it as a significant income source. Whether it’s pursuing a passion, consulting, or part-time work, continued employment can supplement retirement savings and provide personal fulfillment.
Aligning Your Plan with Reality
Expectations versus actual income sources in retirement often differ. Makeba Financial Group is here to help you navigate these nuances. Through our personalized risk-management strategies and insurance planning, we’ll help ensure your retirement income aligns with your goals and supports a secure future.
