9 Ways to Pay for Retirement

Setting up several sources of income can protect your retirement security

April 4, 2011 RSS Feed Print

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Savings accounts and CDs. Some current workers (37 percent) say interest rates will have a major impact on when they will be able to retire. A quarter of retirees get the majority of their spending money from savings accounts and CDs, and 50 percent say this is a minor source of retirement income, Gallup found. Some current workers (30 percent) are hoping these FDIC-insured accounts will provide enough of a return to be a major source of retirement income. Tillotson recommends that retirees keep at least one or two years' worth of living expenses in cash in these conservative accounts.

[See How to Motivate Yourself to Save for Retirement.]

Annuities or insurance plans. Annuities and insurance plans typically make up a minor source of retirement income. Just 19 percent of retirees say a significant amount of their retirement money comes from these financial products, and 17 percent of employees expect to utilize them.

An inheritance. A few fortunate retirees (6 percent) say an inheritance is significantly funding their retirement. About the same proportion of workers (7 percent) are expecting a large inheritance, and 39 percent are hoping for at least a little inherited money. However, your elderly relatives could end up needing that money if they live longer than expected. "Your parents may be very well heeled, but one long-term medical problem can take the assets that you were anticipating inheriting," says Tillotson. "If you get it, it's gravy."

Twitter: @aiming2retire

Tags:: social security,; investing,; retirement

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I rarely participate in these comments, but I really have to share my story with 1 company which has tremendously helped me. I just turned 74, many obstacles have come in the way of my retirement including a divorce a few years ago which really hurt me financially, to be honest I had this feeling that my savings and SS income were not going to be enough. Months and months of research and dealing with big banks - nothing but a big headache and they wanted to charge an arm and leg - I was considering a standard home equity loan but then I started reading about reverse mortgages. Long story short, i found this company while searching online - reverse mortgage lenders direct - they were able to automatically compare lenders for me and quote me a fantastic quote. I am not saying you need to do a reverse mortgage (for me this has been excellent and recommendable) but if you do here is their number 877 700 0534 - you can find the site online search for reverse mortgage lenders direct.

smithtony184 of NY 6:42AM May 30, 2012

I have gone through your various articles on retirement and wished African Employers (or Governments) could emulate your retirement plans and implimentations to better our aged retirees here in Africa.

Robert Tinga of TX 3:47AM August 19, 2011

I seldom see anyone rant about reverse mortgages excepting the kids who thought they were going to get a house free and clear when granny kicked off.
The down side of a reverse mortgage is simple - if you are financially destitute then just sell the house because you do have to pay the property taxes, continuing paying for homeowner's insurance, and maintain the home and property in a condition similar to to the condition the home was in when you obtained the mortgage. That's the fine print. If you can't do these things after receiving a reverse mortgage - you were going to lose the property anyway.
On the other hand, if you have 50% or so in home equity, and you need a lump sum to pay off some bills or cover a large medical expense, and getting rid of the monthly mortgage payment means you can afford to eat out once in a while, or buy a nice roast instead of cheap burger... then for you, the non-recourse reverse mortgage (Home Equity Conversion Mortgage) (meaning the property is the ONLY asset the mortgage holder can touch) may make your retirement a LOT more comfortable, while enabling you to live out the rest of your life in your home. When the last borrower dies or no longer resides in the home (at least part time) then the property is sold, the mortgage gets paid off, whatever remains goes to the estate.
Pretty good deal if the other option is to give up a home you have lived in a long time, that carries a lot of memories, that you raised a family in - and go live in a small apartment because you can't handle the mortgage, taxes, insurance, and cost of living on your reduced retirement income.
Getting rid of that $600 or $800 a month mortgage payment... that can mean a WORLD of difference in the quality of life for a senious citizen. Can mean they can eat AND buy their medicine, not have to choose between the two.
Most HUD counselors take their responsibility rather seriously - not many FHA approved HECM loans are made where it wasn't in the best interests of the homeowner. As I mentioned - the kids looking to inherit might now like it - but they need to get over it. Maybe if they were willing and able to chip in a little help with the monthly cost of living for Mom and Dad, their parents wouldn't NEED a reverse mortgage.

David Beatty of CA 5:57PM April 22, 2011