10 Sources of Retirement Income for Americans

1. Social Security Benefits

Eligibility: Retirees aged 62+ who have paid into Social Security for at least 10 years.
How it's calculated: Based on your 35 highest-earning years. Full benefits at 66-67, reduced at 62, increased if delayed to 70.
Taxation: Up to 85% of benefits may be taxed depending on your total income.
When you can take it: As early as 62, full benefits at 66-67, maximum benefits at 70.

2. Employer Pension Plans

Eligibility: Employees who participated in a pension plan through their employer.
How it's calculated: Varies by plan; defined benefit plans offer a guaranteed monthly amount, while defined contribution plans depend on investment performance.
Taxation: Fully taxable when payments are received.
When you can take it: Typically starting between ages 55 and 65, depending on the plan's rules.

3. 401(k) and 403(b) Plans

Eligibility: Individuals who have contributed to employer-sponsored retirement savings plans.
How it's calculated: Contributions grow tax-deferred and are invested in various assets.
Taxation: Withdrawals are taxed as ordinary income. Roth 401(k) withdrawals are tax-free if certain conditions are met.
When you can take it: Withdrawals can begin at 59 ½; RMDs start at age 73.

4. Individual Retirement Accounts (IRAs)

Eligibility: Available to anyone with earned income, with different rules for traditional and Roth IRAs.
How it's calculated: Contributions grow tax-deferred in traditional IRAs or tax-free in Roth IRAs.
Taxation: Traditional IRA withdrawals are taxed as income; Roth IRA withdrawals are tax-free if taken after age 59 ½ and account is at least five years old.
When you can take it: Withdrawals can begin at 59 ½; RMDs start at 73 for traditional IRAs.

5. Investment Income (Non-Retirement Accounts)

Eligibility: Open to anyone with investment portfolios, including stocks, bonds, and mutual funds.
How it's calculated: Based on investment growth through dividends, interest, and capital gains.
Taxation: Dividends and interest are taxed annually. Capital gains are taxed when assets are sold.
When you can take it: Anytime; no withdrawal restrictions, but taxes apply on earnings.

6. Home Equity (Downsizing or Reverse Mortgages)

Eligibility: Homeowners, typically aged 62 or older for reverse mortgages.
How it's calculated: Downsizing provides cash from home sale; reverse mortgages allow homeowners to borrow against home equity.
Taxation: Proceeds from selling a primary residence may be tax-free up to $250,000 ($500,000 for couples); reverse mortgage proceeds are not taxable.
When you can take it: Anytime through downsizing; reverse mortgages available at age 62+.

7. Part-Time Work

Eligibility: Open to anyone willing to work during retirement.
How it's calculated: Income depends on the job and hours worked.
Taxation: Fully taxable as earned income.
When you can take it: Anytime during retirement.

8. Annuities

Eligibility: Available to individuals who purchase annuities from insurance companies.
How it's calculated: You make an upfront payment or series of payments, and the insurance company provides regular payouts.
Taxation: Payments are partly taxable if funded with after-tax dollars, fully taxable if funded through a retirement account.
When you can take it: Depending on the annuity, payouts can begin immediately or at a specified age.

9. Rental Income

Rental properties are a great additional to your retirement portfolio. Rental income or proceeds from a sale can provide substantial income in retirement.

Eligibility: Property owners who rent out real estate.
How it's calculated: Rental income minus property expenses (maintenance, taxes, etc.).
Taxation: Rental income is taxable, though expenses can be deducted. Capital gains tax applies if the property is sold.
When you can take it: As long as the property is rented or after selling the property.

10. Health Savings Accounts (HSAs)

Eligibility: Individuals enrolled in high-deductible health insurance plans.
How it's calculated: Contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for medical expenses.
Taxation: Withdrawals for non-medical expenses before age 65 are taxed and penalized; after 65, non-medical withdrawals are taxed as income.
When you can take it: Medical withdrawals are tax-free anytime; non-medical withdrawals taxed after age 65.