10 Ways to Fund Your Retirement
Most workers depend on the steady paychecks they receive from a single job. But retirees often have multiple sources of income, including Social Security, pension payments, withdrawals from retirement accounts or other investments and sometimes even income from a part-time job, according to a recent Gallup poll of 1,015 adults, including 652 workers and 363 retirees. Setting up several sources of retirement funds can give you extra security in retirement. Here are 10 ways you can pay for retirement.
Social Security. Social Security is the most common form of retirement income, with 90 percent of retirees receiving monthly payments and 59 percent calling Social Security their major source of retirement income. Most workers (84 percent) also expect to claim Social Security benefits in retirement, but only about a third (36 percent) expect Social Security to be their primary source of funds.
Retirement accounts. About three quarters of workers (79 percent) expect to use the money they have saved in a 401(k) or IRA to pay their retirement bills, and 49 percent expect these retirement accounts to be a major source of funds, Gallup found. But only about half (55 percent) of current retirees say they use withdrawals from retirement accounts to cover their expenses, and just a quarter consider 401(k) or IRA distributions to be a major source of retirement income.
A pension. Just over a third (36 percent) of retirees say traditional pension payments are a major source of retirement income, but few companies continue to provide pension plans to current employees. Only a quarter of workers expect to receive significant payments from a traditional pension plan in retirement.
Savings accounts and CDs. Although interest rates are low, these Federal Deposit Insurance Corp.-insured accounts are a safe place to keep funds you can't afford to lose. Half of retirees (51 percent) and 69 percent of workers keep some of their nest egg in savings accounts and CDs.
A part-time job. Two-thirds of workers (67 percent) are interested in continuing to work for pay during the traditional retirement years. However, only 20 percent of retirees say they receive income from a part-time job. It's not always possible to continue to work in retirement, and sometimes a health problem or layoff can force you into retirement ahead of schedule.
Home equity. You can use the equity you have built up in your home to help pay for retirement if you downsize to a less expensive house or take out a reverse mortgage. Some 44 percent of retirees say they have used some of their home equity to help pay for retirement, and even more workers (59 percent) are interested in tapping home equity for retirement costs.
Stocks. Individual stocks or stock mutual fund investments provide retirement income for 40 percent of retirees. Even more workers (61 percent) are hoping stock market gains will help propel them to a secure retirement.
An inheritance. Many workers (42 percent) are expecting an inheritance that will give their retirement finances a boost. However, only 22 percent of retirees say they have actually inherited enough wealth that it made a difference to their retirement finances. So, it's best not to count on an inheritance until you receive one.
Annuities. If you're willing to hand over a significant payment to an insurance company, an immediate annuity provides a steady stream of retirement income that lasts the rest of your life. Some 43 percent of workers say they are open to the idea of annuitizing some of their retirement savings, and 33 percent of retirees report they receive income from annuities or other insurance products.
Rent and royalties. Rental real estate or intellectual properties provide income to 21 percent of retirees. And just over a third (35 percent) of workers expect to receive rent or royalty payments in retirement.
Emily Brandon is the senior editor for Retirement at U.S. News. You can contact her on Twitter @aiming2retire, circle her on Google+ or email her at ebrandon@usnews.com.
More From US News & World Report
