Once retirement happens, where will your income come from? You may not be able to rely on your kids taking you in or a rich relative leaving you money. It's better if you have your own retirement plan to collect from. Should you rely solely on Social Security for income, or do you have other options?
Your options for income once you leave the workforce include:
- collecting Social Security
- collecting from an employer-sponsored plan such as a 401k or 403b
- collecting from your own savings plan such as an IRA or Roth IRA
- working part-time
Click the rows below to learn more about your retirement income options.
If you participate in an employer-sponsored retirement plan such as a 401k or 403b, you set aside a portion of your wages, and your employer then invests that money on your behalf. You can start collecting income from these plans at age 59 ½. If you withdraw before that age, you will face a 10% penalty by the IRS. The amount of income you receive from the plan upon retirement is up to you.
An IRA or Roth IRA is a retirement plan you set up yourself, and you choose how much and what to invest in. You can start collecting from these plans at age 59 ½ also. If you withdraw before that age, you will face a 10% penalty by the IRS. The amount of income you receive from the plan upon retirement is up to you.
The amount of income you receive from Social Security is based on the number of years you work and the income you earn during your lifetime; it is modified by the age you claim benefits. For the average worker, Social Security will replace 40% of their income. For reference, the estimated average Social Security retirement benefit in 2021 was $1,543 a month.
You can also work part time. For some, continuing to work may be a necessity; for others, it may mean trying something new to keep them busy and to have a sense of purpose. The amount of income you receive from the part-time work will depend on the job and the hours.
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