The 4 Most Important Sources of Retirement Income

Retirees are increasingly depending on a single source of retirement income.

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Most senior citizens have very small retirement incomes. The median income for those age 65 and older was $25,757 in 2010, according to a new Social Security Administration report. The most common retirement income level is between $15,000 and $19,999 annually, an income range that 12.6 percent of retirees fall into. Here’s where most retirees get their income from, and how much they are getting from each source:

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Social Security. Social Security is the most utilized retirement benefit, with 86 percent of people age 65 and older receiving monthly payments, SSA found. Some people delay claiming past age 65 in order to get bigger monthly checks. Almost all seniors who were age 80 and older in 2010 (92 percent) received a Social Security check. The median Social Security payment amount was $15,701 in 2010.

For most people, Social Security is the largest source of retirement income. The majority of retirees (65 percent) get half or more of their income from Social Security. And over a third (36 percent) of people age 65 and older receive at least 90 percent of their income as a monthly Social Security payment.

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Income from assets. Just about half of seniors (49 percent) received interest from assets held in bonds, treasury notes, IRAs, certificates of deposit, and interest-bearing savings and checking accounts in 2010. And 19 percent of retirees received dividend payments from stock holdings and mutual fund shares. Some seniors also bring in extra retirement income by renting out property or earn royalties from work done earlier in their career (9 percent). However, most retirees receive only a small amount of income from these assets. The median asset income was just $1,260 in 2010.

Pensions. Some current retirees still have access to private pensions or annuities (27 percent) or public pensions (15 percent), such as those provided by the military or federal, state, or local government. The median pension received by those age 65 and older was worth $12,700 in 2010. Government employee pensions generally paid considerably higher annual benefits ($20,000) than private pensions and annuities ($8,844) in 2010.

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Employment. Continued employment is increasingly becoming a part of the retirement years. Just over a quarter (26 percent) of Americans age 65 and older held a paid job or were self-employed in 2010. People who work at age 65 and older earned a median of $28,000 in 2010, considerably less than the median of $45,000 earned by people age 62 to 64 and the $54,000 workers age 55 to 61 were paid.