The Top 8 Sources of Retirement Income, According to Retirees

According to a recent survey from the nonprofit Employee Benefit Research Institute, 77% of retirees believe they can live comfortably during retirement.

Where’s their money coming from? A combination of income sources, says the 2022 Retirement Confidence Survey, which polled more than 2,600 Americans to reach its conclusions.

More than one-third (36%) of those surveyed noted that retirement expenses are higher than they’d anticipated. In 2021, only 26% of retirees said that. Despite these expenses, 32% of retirees continue to save and invest, with an eye toward issues like future health needs (including long-term care) and being able to leave an inheritance.

Here are the top ways that U.S. elders make bank every month.

8. Financial support from family and friends

Retirees who cited this source of retirement income: 15%

It isn’t clear whether these retirees are receiving help right now or whether they simply foresee having to ask someday.

Here’s a troubling stat from the EBRI study, though: Among of the respondents still working, a startling 37% expect financial support from family and friends to be a source of income in retirement.

7. Work for pay

Retirees who cited this source of retirement income: 22%

This figure is similar to a 2022 U.S. Census Bureau analysis that notes 20.4% of people over age 65 still work for pay.

The Retirement Confidence Survey notes that a whopping 68% of current workers plan to do some kind of work in retirement. However, nearly half of retirees left the workforce earlier than expected, and two-thirds say that was because of issues outside their control, such as a layoff or health problems. That’s why current employees shouldn’t count on working in retirement.

6. Product that guarantees monthly income for life

Retirees who cited this source of retirement income: 34%

This share of retirees has gone up a bit since EBRI’s 2021 survey, when only 30% of those interviewed had a source of guaranteed monthly income.

Products like annuities that provide such income can be fairly safe investments for retirees; however, they do have their drawbacks. Learn more in “6 Safe and Smart Investments for Retirees.”

5. Workplace retirement savings plan

Retirees who cited this source of retirement income: 47%

Defined contribution retirement plans, such as 401(k) accounts, have become a standard benefit in many workplaces. While 82% of workers surveyed say they expect these plans to be a source of income in retirement, the experience for retirees has been different.

According to the EBRI, only 47% of retirees report a workplace retirement savings plan is a source of their income, with a scant 24% citing it as a “major source” of their money.

4. Individual retirement account

Retirees who cited this source of retirement income: 56%

More than half of retirees surveyed have IRAs as part of their retirement finances. In some cases, these are in addition to workplace plans: One-third of workers who have defined contribution plans also have IRAs, according to the EBRI.

3. Defined benefit (traditional) pension

Retirees who cited this source of retirement income: 57%

According to an EBRI fact sheet, 34 million people in the U.S. have defined benefit or traditional pensions. While cushy pensions are often associated with government jobs, 13.1 million of those who have defined benefit plans work in the private sector.

Traditional pensions were once much more common. Not so much anymore: In 2021, only 25% of civilian workers had access to a traditional pension plan, according to the U.S. Bureau of Labor Statistics.

2. Personal retirement savings/investments

Retirees who cited this source of retirement income: 67%

Social Security alone is not enough, and even if you have a workplace retirement plan or an IRA, you should also have liquid cash savings in retirement. Some people opt for brokerage accounts in addition to their workplace retirement plans.

According to a Federal Reserve Survey of Consumer Finances, the average retirement savings for the 60-something crowd ranges from $206,800 to $221,450.

1. Social Security

Retirees who cited this source of retirement income: 94%

According to the Social Security Administration, the average monthly payment to retirees was $1,543 in 2021. For a couple, both of whom are receiving benefits, the average monthly amount was $2,596.

Again, generally, that’s not enough to live on comfortably; then again, it wasn’t intended to be. When the system was created in the 1930s, Social Security benefits were considered part of “the three-legged stool” of retirement, with the other two legs being private pensions and savings/investments.