Retirement: Where Does All the Money Come From?

(3 Minute Read)

Seniors gearing up for retirement have a difficult task ahead of them: planning out an entire retirement’s worth of finances. Many don’t fully realize where all of their retirement funds come from to begin with.

For most retirees, income is typically comprised of 4 main sources:

  1. Retirement Benefits
  2. Social Security
  3. Income from Assets
  4. Part-Time Work

Retirement Benefits

It’s a common misconception that retirement benefits are the sole source of income that retirees have to depend on. However, lifestyle is often determined by the benefits they’ve managed to build throughout their lives. Benefits are largely based on the amount of time and money invested into the retirement fund while the retiree was still working. Even working for an extra year or two can make a difference in the fixed income rate during retirement.

Social Security

Most retirees draw from Social Security in order to make a living through retirement. In fact, 85% of retirees rely on it, with 51% of married beneficiaries and 74% of non-married beneficiaries reporting that Social Security benefits are a major source of their income. Of course, with the Social Security Trust Fund expected to be completely depleted by 2034.

Part-Time Work

As it stands today, only about a quarter of retirees are working during their retirement in order to supplement their finances. However, continued work after retirement is becoming increasingly important for many seniors. This is largely due to unexpected high medical expenses or smaller retirement benefits.

Asset Income

Many retirees wish to hold onto assets during retirement. Asset income from rental income, royalties, dividends, and interest has been in decline for over 30 years, but those who maintain asset incomes often have better retirement funds. When it comes to their assets, of course, seniors need to make a choice between managing and protecting existing assets or selling them in order to increase their funds. This becomes especially important to think about when considering that inflation will have an effect on their funds in the future.

Many seniors aren’t fully aware of all the income sources they have for their retirement, especially when it comes to their assets. These assets include existing assets that generate income or they may own assets that they can sell in order to pad their retirement fund, like a life insurance policy.

Check out our Advisor Resource Page to learn more about life settlements and don’t hesitate to give us a call to get started on one today!