10 Sources of Retirement Income

Most working Americans have only one source of steady income: their job. In retirement you are likely to have a patchwork quilt of several income streams. Retirement accounts, Social Security, home equity, pensions, and part-time work are the most frequently citied sources of expected retirement income, according to a Gallup poll released today. Here’s a look at ten potential sources of retirement income and how many Americans expect to rely on each one.

Retirement accounts. A 401(k), IRA, Keogh, or other retirement account is how many workers plan to primarily finance their retirement. Some 42 percent of Americans expect to rely on tax-deferred accounts when they retire, down from 54 percent last year and the lowest level since Gallup began asking this question in 2001. Gallup attributes the drop to "statement shock" that confronts workers when they open up their 401(k) statements and see the major decline in value of their savings.

Social Security. Given the decline in other investments, you might expect Americans to say they will increasingly rely on Social Security to finance retirement. But that didn’t happen. About 30 percent of Americans expect Social Security to be a major source of retirement income. This is roughly the same as last year and has remained fairly steady throughout the past decade.

Stocks. Some Americans are fleeing the stock market, but not as many as you might think. The percentage of workers expecting to rely on individual stocks or stock mutual funds in retirement has held steady at 17 percent both this year and last year, but is down from a peak of 24 percent in 2007.

Savings. There has been a resurgence of interest in completely safe savings vehicles such as certificates of deposit and savings accounts. About 20 percent of Americans expect to rely on these FDIC-insured accounts when they retire, up from 17 percent last year.

Pensions. Consider yourself lucky if you still expect to recieve a pension in retirement. About 24 percent of Americans plan to rely on a work-sponsored pension when they retire. This is the lowest level Gallup has measured in 9 years of doing the survey and is down from a high of 34 percent in 2001 and 31 percent two years ago.

Rent and royalties. A book or a rental property can bring in income long after you leave the workplace. About 6 percent of Americans expect rent and royalties to help finance their retirement. This number has remained steady throughout the decade.

Inheritance. You could, of course, wait for your wealthy parents or relatives to help finance your retirement (and hope they don’t write you out of their will). But only 7 percent of Americans expect to receive an inheritance large enough to help fund their retirement.

Annuities or insurance. Some 7 percent of Americans plan to rely on an annuity or some form of insurance product to finance retirement. This percentage has also not fluctuated much over the past 9 years.

Part-time work. One sure way to increase your retirement security is to delay retirement or even work during the traditional retirement years. About 22 percent of Americans expect to work part-time after they officially retire. This number has doubled since 2001 when only 10 percent said part-time work would be a major source of retirement income.

Home equity. Many American’s largest source of wealth is their home. Just under a quarter (24 percent) of those surveyed expect to tap their home equity to help finance retirement.

Gallup’s telephone survey of 676 non-retirees age 18 and older also found that 52 percent doubt they will have enough money to live comfortably in retirement, while only 41 percent say they will. This is the first time this decade that the majority of Americans have doubted their ability to retire.