Once you retire, the income you relied on during your working years will decrease or disappear. It’s critical to have in place adequate sources of income to cover your expenses during retirement.

The main sources of income in retirement include:

• Pensions. First,defined benefit pensions provide guaranteed income streams for life, typically payable at retirement. Pensions used to be common but now are rare, with mainly government employees and some non-profit workers qualifying for them. Pension benefits are determined by years of service and salary.
• Social Security. Then,Social Security provides benefits that most Americans can count on in retirement. Benefits are based on your lifetime earnings reported to the Social Security Administration. You apply for benefits around age 65 and can receive benefits up to age 70 for higher payouts. Social Security is meant to replace about 40% of pre-retirement income.
• Retirement accounts. Also,savings in tax-advantaged retirement accounts like 401(k)s, IRAs, and Roth IRAs provide investment returns and financial security in retirement. You begin withdrawing money from these accounts at age 59 1⁄2. Required minimum distributions ensure you spend the money within your lifetime.
• Annuities. Then,annuities provide a series of guaranteed periodic payments, like monthly or annual income payments. You can get an immediate annuity with a lump sum or redeposit part of your retirement savings in an annuity account to generate income for life. Annuities come in various forms including single life, joint life, fixed, variable and inflation-adjusted.
• Investments. Any assets like bonds, stocks, real estate rentals, certificates of deposit or royalties can provide investment income in retirement. Growth and stability of income will depend on the performance and risks associated with each investment vehicle. Income from investments can supplement other income sources.
• Employment. Some retirees choose to work part-time during retirement to generate additional income. While you can receive Social Security benefits from age 62, earnings may reduce benefits if under full retirement age. Part-time work allows you to remain active and engaged while funding important expenses.

A good retirement income plan diversifies income across multiple sources for more financial security and stability. No single source guarantees enough income for long retirements on its own. Discuss with a financial advisor to determine the optimal mix of income sources and levels based on your unique retirement goals.