After decades of saving for retirement, the time eventually arrives when you can reap the rewards. But how exactly will you cover day-to-day expenses once the paychecks from your job stop flowing in?
Recently, the Transamerica Center for Retirement Studies asked around 10,000 adults — including around 2,400 retirees — which sources of income they plan to tap to cover living expenses in retirement.
Following are the top ways retirees say they will fund their golden years.
7. Working
Respondents who expect this to be a source of income after they retire: 4%
Some seniors work out of necessity. Others do so because they love it.
Whatever the reason, a small percentage of retirees report keeping a job in their golden years. If you are among them, check out “21 Great Part-Time Jobs for Retirees Who Aren’t Ready to Call It Quits.”
6. Inheritance
Respondents who expect this to be a source of income after they retire: 8%
If you are lucky enough to get an inheritance, make sure you spend it wisely. For tips, read “7 Steps to Make the Most of an Inheritance.”
5. Home equity
Respondents who expect this to be a source of income after they retire: 12%
In retirement, it might be possible to tap your home equity in several ways: a mortgage refinance, a home equity loan or line of credit, or a reverse mortgage.
This last option is controversial, but that doesn’t mean it isn’t right for some people. Money Talks News founder Stacy Johnson discusses the pros and cons of reverse mortgages in “Should I Get a Reverse Mortgage?”
4. Company-funded pension plan
Respondents who expect this to be a source of income after they retire: 37%
It’s becoming less common to see a retiree living off a pension today — and in fact, some say pensions were never as widespread as is commonly believed.
However, there have always been a lucky few who have had this resource to turn to in retirement. And that’s still true today.
3. 401(k)s, 403(b)s and IRAs
Respondents who expect this to be a source of income after they retire: 41%
With any luck, you’ve been saving in a 401(k), IRA or other retirement vehicle for decades.
But even if you are getting a late start, every dime you save now can make a big difference during your golden years. For inspiration, check out “5 Ways You Can Save $500,000 in 15 Years.”
2. Other savings and investments
Respondents who expect this to be a source of income after they retire: 47%
Those who have worked hard and saved money year after year often are rewarded in retirement.
If you are looking for safe places to put your money, check out “8 of the Best Places to Put Your Money as Interest Rates Fall.”
1. Social Security
Respondents who expect this to be a source of income after they retire: 91%
It’s no surprise that the nation’s retirement program — Social Security — finishes in the top spot on this list.
Many Americans get a large percentage of their retirement income from Social Security, and as we have noted, it’s not impossible to retire solely on its benefits. For more, check out “8 Essential Moves for Retiring Comfortably on Social Security Alone.”
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