What to Expect from Your Retirement Income Sources

So now you are planning your retirement thoroughly. You are sure that you still get your income to maintain your retirement lifestyle.

Here’s a rough breakdown of where your retirement income will likely come from when you retire:

• Social security: 30%
• Pension and investments: 70%

Let’s look at these sources in more detail.

Please remember one important lesson that the key to improving the bottom line of your financial life involves crunching numbers. With that in mind, the first step is to estimate how much you expect to get from Social Security and other sources of income for your retirement. You can get a rough estimate by using the calculators at www.ssa.gov.

The Social Security Administration automatically mails a statement of estimated benefits to anyone over age 25 who has worked in Social Security–covered employment or self- employment. Unless you’re already receiving Social Security benefits payments, you should be getting this statement about three months before each birthday. When you get your statement in the mail, hold onto it! Lost it already? You can get another by calling (800-772-1213), visiting a local office, or through www.ssa.gov.

Today you can collect about 80% of your Social Security when you’re 62 years old. Wait until your full retirement age, though, and you’ll collect the full amount. Although the full retirement age formerly was 65 years old, those born after 1943 won’t be able to take full Social Security pay until they hit age 66. Those born after 1960 won’t be able to tap their full benefits until age 67.

Once you’ve nailed down how much you’ll get from Social Security, the next step is to total how much you’ll be able to collect from your other retirement savings plan accounts. These may include IRAs, 401(k)s, other company or private pension, annuities, and life insurance. Plus, add in the reams of other investment income we hope you’ll have.

Think you’ll have enough? If not, table below gives you an idea of what you’ll have to sock away each month just to get an extra $100,000 at retirement—assuming the investment grows at an annual rate of 8%.

Wow! These monthly amounts may seem like a lot to put away to reach a single financial goal. But don’t forget, you might already have some savings. Plus, you might be getting more Social Security down the road if your wages rise—that’s assuming the U.S. government figures out how to fund it. Also, wait until the full retirement age, and you’ll get even more Social Security benefits.